The idea is to minimize display blank time when switching from boot logo to unlock prompt and from unlock prompt to regular sailfish ui managed by lipstick. While there is some variance between devices in how it actually goes, generally speaking in devices with fbdev kernel unlock prompt stays on screen and that animated spinner is shown all the way until lockscreen appears.
In case of Xperia 10 there is some blank time due to combination of: lipstick uses android hw compositor for display control (performance) while unlock needs to use kernel interfaces directly (minimal dependencies), how android service bring up happens during bootup and how drm/kms kernel works → hw compositor needs to be stopped before unlock prompt can be shown (= blank gap at step 3) and started again in between unlock prompt and lipstick startup (= blank gap at step 5).