Here's my understanding:
Your home folder is
HD>Users>username
A normal user account uses ordinary subfolders - Documents, Music, Movies, etc - located inside that home folder to hold your data. If you delete a big movie file, the space freed up is of course released to your entire startup volume.
A FileVault account instead puts all of its data into an encrypted disk image - in fact an encrypted sparseimage. If FileVault is enabled, your home folder doesn't directly contain your Documents and other data folders. It looks as if it does from Finder when you are logged in, but actually all that your home folder really contains is a single file named username.sparseimage. When you log in and give your password, this disk image mounts and you can access your files.
I no longer have a FileVault account to check this, but to my recollection the file structure was:
When logged out:
HD>Users>username>username.sparseimage
When logged in
HD>Users>.username>username.sparseimage
HD>Users>username alias to the mounted volume
Note the new leading period in the name of the username folder when logged in, making it invisible to Finder. The "home" icon that you see in Finder is not really a folder, it is an alias to the mounted disk image that contains all your files.
A problem with using a disk image instead of a folder is what happens when large files are added and then later deleted, emptying the trash. A folder has no minimum size, and if its contents are deleted it will of course release the disk space immediately to the volume that contains it. However a mounted disk image IS such a volume. A "sparse" image file is small when created, can expand to a maximum size when files are added to it, but does not automatically shrink down again when files inside are deleted. So when large files are deleted from a FileVault account, the space freed up is not immediately available on the startup volume. However although a sparseimage does not automatically shrink when files inside it are deleted, it can be "compacted" when it is unmounted, recovering the lost space. This "compacting" of the sparseimage file is what you are offered when you are asked if you want FileVault to recover the space. It can also be done manually using Terminal.
Once the sparseimage file is compacted, though, it is only a little bigger than the sum of the files and folders it contains. So there may be other reasons to turn off FileVault, but you won't gain a lot of extra startup disk space by doing so if FileVault has already "recovered" the unused space.
