If I'm not mistaken, if a host is scheduled for downtime, then all services will, by default, be assumed to be down also. Keep in mind that scheduling downtime only suppress' notifications. It does not prevent the checks from being performed. With that in mind, when the service is checked and it fails, it then checks to see if host is down. If host is down, it checks for parents being down. Once it gets to the top dog host, and it fails also, it checks to see if it should send out notifications. Of course, since it's in the scheduled down state, then no notification is sent out. Hopefully that is clear. No notifications, but the checks are still made and follow all the logic programmed into nagios.