That's identical to the Hibernate function. So leave it less than 3 hours, then you get your regular sleep with virtually zero wake up time courtesy of Haswell. Leave it for longer than 3 hours, than you get Hibernate-like sleep where it uses virtually zero power.
It seems that it enters S1 state first, then after 3 hours S5.
http://www.anandtech.com/show/6355/intels-haswell-architecture/3
When the screen blanks it enters some of the new S0ix states.
Lets assume you are encoding a movie, which takes longer than 3 hours. You set the display timeout for 5 minutes. Will the encoding finish? How long does the encoding take? (I assume that cpu power is reduced while in sleeping state).