How does "Mac OS Extended (Journaled, Encrypted)" actually work?

when format external drive "mac os extended (journaled, encrypted)" setting in disk utility, , set password, i'm supposedly encrypting entire drive.

mean, , how work?

when open file on drive, happens? file read memory only? is other unencrypted stuff written out drive temporarily?

happens when prematurely shut down drive (by unplugging power cord). unencrypted data remain on drive then?

 

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