For network communication or when the file is simply stored "at rest" on the server?
The first keeps "sniffers" from reading the communication between host and client over your network and the second keeps someone who has gained an illicit copy of the file from hacking it open (which is very easy to do if the file is NOT encrypted.) Both are options you can specify for a FileMaker solution.
Both info should be readily available from FileMaker's company web page.
...Appendix C, on page 29 has a table with details.