Filefault encryption of mac machine using icloud account

1. When you turn on FileVault, it encrypts your entire start up disk. The iCloud account is only used, optionally, as a recovery method.
2. FileVault does not sync any user data to iCloud.
3. The recovery key can be generated if you prefer that instead of using your iCloud ID and password for recovery. See the following from Encrypt Mac data with FileVault - Apple Support

To set up FileVault, you must be an administrator. When you turn on FileVault, you choose how you want to unlock your startup disk if you ever forget your password:

• iCloud account and password: This choice is convenient if you use iCloud or plan to set it up—you don’t need to keep track of a separate recovery key.

• Recovery key: The key is a string of letters and numbers that’s created for you—keep a copy of the key somewhere other than your encrypted startup disk. If you write the key down, be sure to exactly copy the letters and numbers shown. Then keep the key somewhere safe that you’ll remember—but not in the same physical location as your Mac, where it can be discovered. If your Mac is at a business or school, your institution can also set a recovery key to unlock it.
• WARNING: Don’t forget your recovery key. If you turn on FileVault and then forget your login password and can’t reset it, and you also forget your recovery key, you won’t be able to log in, and your files and settings will be lost forever.