The purpose of the crossover frequency is to allow you to direct your bass frequencies from speakers with a lower ability to recreate them, to dedicated speakers that can.
The unit does this in different ways depending on the speaker setup the user has.
The first thing to understand is that the Subwoofer output is different to the LFE (low frequency Effects) channel. The LFE is a soundtrack encoded on a disc in Dolby Digital or DTS formats, this will always be sent to the Subwoofer output as long as you have your Subwoofer set as Yes/On and is not affected by the crossover setting.i.e. the LFE is the .1 of a 5.1 encoded signal coming in. The Subwoofer channel is the physical output and may be different as it may have other signals added to it as well as the LFE channel.
If we had a system with all speakers Large and played DD 5.1 the unit would send the 5 surround outputs to all the speakers unfiltered and the LFE channel would be directed to the Subwoofer.
However if we have a system where all speakers are set Small and played DD5.1 the unit would now filer the bass out of all the speakers and send it to the Subwoofer in addition to the actual LFE channel itself.
If we set the Subwoofer to No/Off and all the speakers to Large the unit would send all the channels unfiltered to their speakers and now send the LFE channel to the front left and right speakers in addition to their own channels.
If we set the Subwoofer to Yes/On and the front speakers Large but the surrounds Small the unit will send the front speakers unfiltered but filter the surrounds and send their bass plus the LFE channel to the Subwoofer.
For all channels that are being filtered (the Small ones) the crossover used is a 12dB an octave one so some bass of course will still be heard in the Small channels the slope not being very very steep ( a very steep slope would introduce major phase shifts that can cause issues.
The bass management scheme by the way is mandated by both Dolby and DTS and although there is some flexibility allowed in each manufacturers interpretation, most of the above is basically a requirement for approval.
The unit uses the same crossover point also to make a subwoofer channel for the Stereo mode as you have realised.
The 650R, 651R and 751R have some extra features and actually allows the user to set different crossover points and sublevels for Stereo mode and surround modes, plus has a feature that allows the fronts to remain large whilst duplicating their bass to the Subwoofer (rather than re-directing it) etc.