I think the best way I have heard it described is that it operates like current iDevices do. The storage is always encrypted, if you set a passcode the main volume will not be decrypted until it is entered, so you are effectively keeping the OS from accessing the key, or keys really, that are stored in the Secure Enclave until you enter your passcode on your iDevice. The new MacBook Pro, and I believe the iMac Pro, operate the same. The drives are always encrypted, turning on FileVault just password protects the decryption key. No decryption will happen until the password is entered.
This too is probably oversimplification, my guess is that there are multiple parts of the drive that are encrypted in different ways. Much like the iDevices. Some parts are decrypted automatically, like the boot partition, other parts can be held up by not having entered the passcode. Either way, the FileVault on the 2018 MacBook Pro is happening instantly because the drives aren't being encrypted or decrypted. You are password protecting the decryption key, and removing that protection with the checkbox.