No it just stops. Typically you stop the second hand at the 12 position. Allows one to set an exact minute. With a hacking movement, when you pull out the crown to the time set position the second hand stops. Wherever it stops is where it stays until you push the crown back in. With a non-hacking movement, the second hand does not stop in any crown position so long as the watch has power remaining, of course.
"A hack watch is a watch that offers a mechanism for setting the watch to a specific time, stopping the watch, then restarting the watch the instant the time setting matches the time displayed by a reference timepiece"
Many newer models from the Seiko 5 line have moved up to the 4R36 and similar movements that have hacking and hand-winding features. I'd bet it won't be too much longer before Seiko retires the 7S movements for everything but the bargain basement models.
You're dead on Ganson. I live my snk805 and my SNXS75, but seeing those are such a pain. I can get my SNK805 to "back hack" or get the second hand to spin backwards or stop, but the watch runs a little slow. Might get it adjusted. I can't get the SNXS75 to stop at all, but that watch is at -5 sec a week!!!! So I don't worry about it. Too much. Although I do like the tiny 4 o'clock crown, I don't think they'd do hand winding with it. Would kinda suck if they did retire the 7s movement completely. Kills a little of the Seiko 5 charm.