[steventhedev]

It doesn't. But neither do passphrases. The key has to be in process memory at some point, and if you're running a compromised process under your user, you've already lost.

The only threat a passphrase protects against that an encrypted home doesn't is someone walking up to my unlocked laptop (it locks automatically after 5 minutes, and I make a point of locking it when I'm leaving). If you run ssh-agent, you're exposed to this threat anyways.

EDIT: After some thought, passphrases can protect against a poorly executed attack, where just files are copied wholesale, or an accidental leak. So while theoretically you're not protected, it may be sufficient for some practical security. I'll be looking into using ssh-agent in the near future.

[Freak_NL]

A passphrase also protects against someone acquiring your private key by some other means. For example, if you accidentally copy the key file somewhere, or some tool (Dropbox, OwnCloud, any cloud syncing tool) syncs it to an unsecured or compromised location. The passphrase adds a knowledge factor to the key's security.