Leopard includes a new type of file image called a "Sparsebundle". How is this different from a sparseimage? What is it used for? I'm sure someone at Apple knows, but the googlesphere doesn't seem to be doing much good. Here's what I've learned:
Sparsebundle images are like Sparseimages except they are made up of "bands".
Sparsebundles are used by Filevault in Leopard and help with Time Machine backups.
Bands have individual 8Mb chunks. Time machine will only back up chunks that have changed.
Sparsebundles are actually directories, you can look in them to see the data structure. Here is what you see.
This is why Time Machine has to log out to back up your Filevaulted Users directory. However, it is a huge bonus because otherwise, if you changed a single byte while logged in, your previous filevault structure would have changed the attributes of the Entire Ginormous Sparseimage, which would then take hours for Time Machine to back up.
Now using Sparsebundles, you log out, and Time Machine looks at the meta-data for the chunks that have changed and only backs up those. Also, the Time Machine backup was supposed to be encrypted, this support seems to have been dropped. But since your sparsebundle is copied whole, filevaulted users are safe. You non-filevault using people are leaving usb drives full of your data all over the place though. Beware.
This appears to be a stopgap measure before ZFS is fully implemented. Use ZFS peoples. It has snapshots and pools.