I think he means the brief moments when the display turns on to show you the yellow "Battery is charging" banner. It does the same to tell you that "Battery is fully charged." Mine does that and I do not have that "stay lit while charging" box ticked.

I do not know if this is configurable but I have a faint recollection of this coming with something I've installed. Most likely CSSU or Advanced Power. It may not be present on stock devices.

1W is indeed not enough. It equals to only 200mA at 5V, which is just about enough to keep the N900 alive but not much else. It certainly won't give enough power to charge it while in use.

EDIT: I also find the yellow banner irritating but for a different reason. I often go to sleep with my N900 on the charger and under the pillow (so that the alarm wakes up only me and not whoever sleeps next to me). When the screen turns on to tell me it's fully charged, I may accidentally press something.