When you log in to Facebook, they hash the password you gave them and try that. If it fails, they modify the password you gave them, reversing the case on all letters (and possibly convert numbers to special characters, or vice versa - I don't know if they go that far), and hash that.
Remember that when you log in, the server is receiving your password in plain text. Facebook is just "massaging" that data a bit (possibly several times) to try to correct a user error, rather than just bailing at the first sign of trouble.