There are several different types of passwords in Mac OS X. Today we will be discussing user account passwords and FileVault passwords. User account passwords are not considered to be secure by tech-savvy people. A user account password can be changed without knowing the original password in less than ten minutes by an individual with knowledge of the inner workings of Mac OS X. User account passwords are generally useful to keep your computer safe from snooping family members or roommates, but they are nearly useless against a knowledgeable hacker.
FileVault passwords, on the other hand, will stop anyone without millions of dollars of hardware and several years to dedicate to cracking the password. Enabling FileVault on your computer will make it virtually impossible for the data to be accessed by unauthorized individuals, but the downside is that no one, not even Apple themselves, will be able to recover your data in the event that you forget your password. This is because FileVault encrypts the entire hard drive.
I like to use an analogy to explain how FileVault works: Imagine you have a room full of books, with no windows and only one door. You want to prevent the books from being read by anyone you have not authorized, so you install a lock on the door; this is analogous to a user account password. This will keep out most people, but it is still possible for someone to break the door down and get into the room. If you really want to prevent the books from being read, you can use a secret code to translate each word of every book into gibberish. Now, even if someone manages to break the door down, the books are still useless to them unless they have the secret code, which only you know.
FileVault is a very powerful tool to keep your information private, but use it with caution. As a repair technician, I have seen far more people forget their FileVault password than I have seen people use FileVault to its full potential.