[fruser1]

When off it went into voicemail as usual.

When in the cage I got the out of service area message.

[kiryandil]

Thanks for that!

It really clarified things.

[GingisK]

When off, the phone still hits the tower occasionally in order to keep the network informed of the phone's currently registered tower. That allows incoming calls to be routed to the correct tower quickly rather than using a longer period of time to propagate location when the phone is turned on.

When in the bag, the network does not know where the phone is located, so it is "out of the service area". Your phone is dead to the world when in the bag.