I would assume that when you switch off the second monitor by the power switch the video card detects that, and sets the settings accordingly. If it does not set the settings accordingly it probably just keeps sending a signal, and you can still use the screen space, you just cant see anything.
You have to disable the output manually, but it's really simple. I have a 19" Samsung that I mainly use for tv connected to my 5870 via DVI out on the card. When I want to use it as a second monitor I just go into the Catalyst Control Center and enable the second output on the card.