Few questions for easy, $0.00 modifications

[palemelanesian]

The Scangauge is likely not reporting it correctly. It's only guessing - there's no code in the OBD-II protocol for fuel cut. It just guesses by the light load and rpm.
If it's in gear, your car's momentum is driving the wheels, which in turn are rotating the engine. That's how it stays turning with no fuel. If you're in neutral, the engine will require fuel to keep running, so there's no fuel cutoff in that case.