Here's how mine works:
Always seems to stay on for the "defroster only" setting.
Cycles on/off for the "defroster and lower" setting
Never on the rest of the time (unless of course the AC is on).

I wish I could find a way to turn the AC off completely for the "defrost and lower" setting. I use that setting the most here in Oregon, and I'd prefer not to have the AC come on at all. If I need to I can switch to the "defrost only" and have the AC do its job there. The AC is really effective at removing moisture from the window, but I don't like having to run the AC just to have a little defrost like I normally need.