When computer system hibernates it dumps the entire contents of the RAM to disk and powers down the entire machine. On startup it quickly reloads the data. It allows the system to be completely powered off while in hibernate mode. This requires a file the size of the installed RAM to be placed in the system's root directory, using up space even when not in hibernate mode.
I don't think there is any difference in powering off versus sleep, except for the fact that the data is saved in hibernate