What does "each user must type in their password before they will be able to unlock the disk" mean?
Essentially all users not enabled won' t be capable of unlocking the disk.


If you hit Continue, your Mac will be restarted
All users not enabled previously will not appear at the first login screen and thus won't be able to unlock the disk.  

Once the disk is unlocked, all users may be used though. Even the  previously not 'enabled' users are available by 'user switching' or a 'second' login screen.
After logging in with an enabled user your system will be encrypted.


You may enable users subsequently by clicking the lock and 'Enable User...'


Enter the user's password and click OK, then Done


All users enabled subsequently will reappear at the first login screen, may unlock the disk and log in as usual.