Yes, milliams is basically right. The volume class stores it's data as a collection of blocks, each of which is 32x32x32 voxels by default. If a block is homogeneous (all the voxels are the same) then it is shared with other blocks with the same value. So if you have 10 blocks which all contain just the value '0' then this block is only actually stored once.
The resulting compression is not that high (something like 25%-50%) but it has no effect of read speed. Writing can be slower if a block has to be unshared but this doesn't happen very often. Blocks are unshared as required, but if a block becomes homogenous then PolyVox does not automatically know this. You can occasionally call Volume::tidyUpMemory() to search for homogeneous blocks and share them.
There is some potential to improve the system, but actually I haven't found it to be a big issue. For example, given a 1024^3 volume, the rendering is more of a problem than the memory requirements.
[Edit:] Oh, and you should also look at the documentation in Volume.h. This is one class that is actually quite well documented
