Does Apple's FileVault security program for Mac OS X encrypt just the Home folder or the whole drive?
FileVault's abilities depend on the version you are using. The FileVault encryption feature has been around since Mac OS X 10.3,M, also known as Panther, which was released in 2003, but FileVault has evolved over the years. More recent versions of the system - OS X 10.7, nicknamed Lion, and OS X 10.8, Mountain Lion - use an updated version of the software, FileVault 2.
While the original version of FileVault just encrypted the contents of the user's Home folder, the newer FileVault 2 encrypts the entire disk, and can take advantage of the faster Intel processors in newer Macs to make the encryption/decryption time quicker. FileVault 2 also supports incremental backup and recovery with Apple's built-in Time Machine backup software and offers a user recovery key in case the FileVault 2 password is forgotten. You have the option of storing the recovery key with Apple, which encrypts the key and will unlock it only if three security questions you previously provided are answered successfully.
While faster and more versatile than the original version, FileVault 2 has had some issues, including a password bug earlier this year that has since been fixed. Apple has instructions for setting up FileVault 2 that further explain how it works. The Macworld site has an extensive guide to using FileVault 2 as well if you want more information before you decide if you want to use this optional feature of OS X.
