I use TrueCrypt on OSX and get firewall popups asking whether to allow incoming connections by TrueCrypt.app. I can't fathom a reason why such an application would need this.
Can anyone explain?
I couldn't find any documentation that suggested TrueCrypt ever uses networking, unless you're mounting on a network drive or require files stored elsewhere on a network (e.g.: keyfile). It doesn't even have an auto-update.
According to a site-specific Google search, no page in TrueCrypt specifically refers to an internet connection, and the only two that referred to a network connection are the Sharing Over Network FAQ page and the TPM Attack FAQ item.
If it's neither of these cases and you can't see why TrueCrypt's involved in network activity, I would act with extreme suspicion and at the very least block the traffic.
If you've got any knowledge of network packets, you could always take a peek with Wireshark to see what's going on exactly.
Okay based on your comments the situation's clear and not dangerous. You have network drives and the Firewall message opens up when the Open dialogue appears: coincidences and computers don't go well together. Here's what happens.
Pretty harmless. Allow the traffic if you want it to see your network drives; disallow if you don't and either way it probably doesn't matter or affect anything unless your image file is on the network - in which case being unable to see its drive will make it pretty hard to locate!