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Are you referring to the power down mode of the PHY? This is different than wake on lan. In power down mode, the PHY internally disables all the block to save power. In this mode the PHY will drop the link and will not detect magic packet. Power down mode can be controlled by the power down pin or via register access.
During wake on lan mode, the PHY itself is not powered down. The PHY will still maintain link in order to receive and detect magic packet. Wake on lan can be used at a system level to save power by turning off other components on the system which are not being used.