I think it's fairly obvious that they "know" they'll lose when they timeout, but there are two reasons for this (I've experienced both)
a) They will wait for you to spend time on another window and will quickly slip back into the game after 1-2 minutes and make a move and suddenly, you'll be the one who risks timing out if you're distracted elsewhere.
b) They are sore enough about being outplayed (or blundering) that they'd want you to sit through till the end to earn the point ... in a "I can't win, but I can still make you wait for a while" manner.
With the recent merge with Facebook, I'd expect more rude players (who've invested ZERO skin in learning and respecting this game) to flood live chess so this is something we're all going to see more of.
I do not know if anyone else has seen this, but when you get into a winning position, the other player leaves. There is no reason for this, as either the time runs out, and you lose, or you show as abandoned, and you lose. Just do what is right and resign, yes it hurts, but in the long run you will gain a much better reputation.