How does APFS encryption work?
APFS encryption is done with the AES encryption algorithm in XTS mode with a 128 bit keylength. This is the same algorithm, mode and keylength used by earlier versions of macOS too (i.e. with HFS+ file systems). 

As you mention Windows BitLocker, this is actually the same method and strength that Windows has recently started using in the newer versions of Windows 10.

Regarding your other questions about guest users and account passwords - this really has nothing to do with APFS encryption. This is instead handled by a layer above called File Vault 2.

File Vault 2 with APFS is really the same as with HFS+ with the one difference that APFS has built-in encryption support (i.e. the AES-XTS-128 for encrypting the data) where HFS+ needs encryption added as layer on top of the file systems (i.e. via Core Storage). In practice there's no real difference for most end-users.

In any case, all the key handling that makes full disk encryption work for the end-user to handle such things as booting from an encrypted drive, user accounts, guests, recovery keys, etc. are all handled by File Vault 2 - which is seperate from the file system itself.