2 Possibilities. 1. The handle switch may have a mechanical brake line to the motor 2. The switch may short circuit the motor to slow it down. With the motor energized, even if it's a series universal motor, it will when spinning freely, act like a generator to a degree, short circuiting that puts a load on the motor and brings it to a stop quicker.
Unplugging the mower with the handle switch in the normal 'run' position will bypass either of these devices. [edited to complete possible explanation]
[This message has been edited by chipmunk (edited 05-10-2005).]
I well remember discovering the generator action of a motor when I was young. We had an old Morphy Richards spin dryer for clothes, with the switch operated by closing the lid. The linkage also operated a physical brake pad on the motor pulley to bring the drum to a stop quickly.
I discovered it was more fun to just pull the plug and listen to the motor slow down gradually. Then I discovered that it was slightly less fun to accidentally grab hold of the exposed pins of the now-disconnected plug while the motor was still turning at a fair rate!
The dynamic braking is a safety feature. Say you realize that you're about to run over your foot with the mower. You'd want the blade to stop very quickly to avoid trimming your toes. So you release the "dead man" spring loaded power switch lever. That kills the power and switches in the dynamic braking.