[rcthompson]

The key is also stored on the disk, encrypted with the password. So presumably an attacker reading the disk could recover the encrypted key and the password and use those to recover the encryption key, which they could then use to decrypt any un-erased fragments of files they find on the disk.

Or something like that. It's an admittedly implausible scenario, but good security is not based on "meh, it probably won't happen". Of course, a much more plausible scenario is password re-use.