It provides an option to either display a long recovery key at first encryption (which you can store somewhere) or to archive it online with Apple in iCloud so that you have a second key available in the event that you lose your password.

But also: backups. make backups.

If you really don't care about unauthorized access, just write the password in sharpie on the box. I have a bunch of machines hooked up to test equipment that sit on their own network. I just write the username and password on the box and no one ever needs to worry about trying to find the sticky note or find me and ask or waste time guessing. The name of the computer, the username, and password are all the same and reflect what the box setup for.

I also endorse writing the "password when passwords don't matter" on the side of the machine. ISPs have been doing it with their gateway modems for years, and I've never heard of any threat model that calls that out as a problem.

I do this with wifi passwords on routers. Though I use masking tape.

There are better ways to solve the forgetting password problem than turning off encryption.

You can always writw it on paper and save it at a physical location where it can be retrieved at a later time or use a password manager.

Why not use a password manager? I use it for every kind of username/password entry. Safe and reliable at least relatively depending on which manager you use.

If you need a password to log in to your system and decrypt your storage, a password manager is useless.

Password managers sync across devices and so if you need a password to log in to your system, then you can retrieve it from the other synced device/s. Or am I missing something?

It can use the icloud account to encrypt the disk, not a separate password to encrypt.