vi_ is right. Our MPU is able to go into 0 mhz state, when it does'nt have anything to do - many times every second. During this state, You save power, not only on "undervolting/umderclocking", but also on power leakage (check how power leakage is calculated - there are many values, but * by mhz @ some point - multiplying by 0, You got zero, no matter what).

"Underclocking" to 125 mhz as way to save power is ages old myth, but to my surprise, it's still popular amongst low-activity members (of Maemo community as whole, or TMO particularly).

This description was short as it could be, cause it was written in details (many times, also by me...) in plentora threads. Interested people are encouraged to search for verbose description.

/Estel