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This is one of the most misunderstood VNAV behaviours in the 737 FMC — get it wrong and the aircraft simply stops climbing where you least expect it.
Miss this distinction in the sim and your aircraft will silently stop climbing short of your clearance — here is exactly why it happens and how to fix it.
When a professional airline examiner uses the same tests he applies to real pilot candidates, and calls the result impressive, it signals that consumer flight simulation has crossed a meaningful threshold of physical accuracy.