The post about losing fat free mass not necessarily being muscle loss is very true. Remember FFM is EVERYTHING that isn't fat. This includes water. Every time you pee - you lose FFM. FFM is a term used interchangably with LBM by most.
About the glycogen. Our body runs on glucose. Glycogen is just stored energy - sugar that isn't in the blood yet to put it simply. When you use your blood sugar from weight training, running, walking, picking your nose - even thinking uses glucose you dip into the glycogen stores.
We try to keep glycogen stores full to keep from losing muscle, however if glycogen stores are always full - we cannot lose fat.
The body needs a certain amount of fat to survive - fat preservation is a survival mechanism. Muscle takes more energy to move around so the body is willing to give up fat more easily for a time, then when it realizes it has given it up, it will start sacrificing that big old energy wasting muscle to preserve fat.
That's the reason I do a high fat diet when I cut - to force the body to use fat for fuel against it's will. Sadly, it's simply not possible to preserve all muscle when we diet down and believe it or not, the less fat we have to lose, the harder it is to get rid of. When I was 300lbs of lard, I had a much easier time losing fat than I do when I cut now. It's not worth getting obese just to lose it easily though. That's why I believe in long, slow, controlled bulking diets with minimal fat gain then a slow cut for amonth to acclimate - then 2 months of hardcore, high fat, cutting. Remember the old bodybuilders meat and eggs diet that had rice the first month, then just meat and eggs the next 2? I do a more modern version of that.