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Basically the car knows it doesn't need to dump fuel into the engine to keep it going so it cuts it off. If you took your car out of gear it would respond by turning the injectors back on. Also, if your RPMs fall below some pre-set number it does the same.
DCFO used with EOC can indeed give you better FE than EOC alone in certain circumstances. I can give you an example: On my drive home from work there are so many chances to EOC for long distances that the headlights can drain the battery so low I may not be able to restart the engine if I mis-time a light and have to stop. In order to prevent this from happening, I frequently would bump-start the engine at times just to get the alternator to charge the battery slightly. I would do this at lights to make sure I wouldn't be stranded. Thus, burning gas that was getting me nowhere.
Now I have an injector cut off switch that allows me to DCFO at any RPM and will not restart the engine when I take it out of gear. I use it when approaching lights that are red or I know will be red before I can get to them. I'm not wasting momentum, since I use it when I know I'm going to be stopping anyway. DCFO also keeps all the underhood pumps working, including A/C if it's on.
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