6.0 marshmallow – how does disabling the boot password before file-based encryption work?

Android 6 (before file-based encryption):

after encrypting the device and setting the screen lock, i can choose an option "require pin code, password or template at startup" or can i choose "no thanks". in the latter case, the phone will boot properly without asking for a password, but will ask for a password only for unlocking the screen.

How it works? how can android boot from fully encrypted disk without getting password? does it effectively disable encryption (using the default password)?