Yes it does as like a 'on/off' switch.
However, not a lot of people realise that using the [play/pause] button is like a "standby" button and use the [on/off] switch too much.
Personally, I've NEVER had to use the [on/off] switch. I've always used the [play/pause] button pressed down a few seconds to turn it 'on/off'.
This has the advantages tadad mentioned above - clock settings stay and you return to your previous song. Also, the [on/off] switch is very fragile and tend to break far too easily.
So far, the only downside I see is it does drain power after awhile. Much like the suspend function on a laptop, it will drain power over time.
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