When FileValut is turned on, it is important to have the recovery key backed up on Swif. Why? Because when you forget your account password and want to reset it, you will need the recovery key to reset it.
A device owner will see this notification on Swif Deskapp (macOS) to ask for the local user password so Swif can generate the FileValut recovery key when the FileValut is turned on before Swif is enrolled on the machine. Please don't ignore it so Swif can have the recovery key for security reasons as you will see below.
With FileVault on, If you forget your account password and want to reset the password, the first thing you will be asked is the recovery key. So you can understand how important the recovery key is.