Cmd W closes the document without quitting TextEdit. just tested on lion.

Mac is document-based instead of application-based so closing document doesn't quit the app. it only does if multiple documents doesn't make sense to the application like System Preferences.

You're doing it wrong.

This is the HIG quote from above:

> "In general, quit when users close the last open window in your app. [...] If users close the last remaining document window in a document-based app and switch to another app, it’s appropriate to quit the app" (emphasis added).

In TextEdit, close the last document and then _switch to another app_. You're missing the last step.

did it again adding the last step (switching to other app), still there though - Lion 10.7.4

Worked for me... Mountain Lion 10.8.1.

    1) Opened TextEdit
    2) Started a document
    3) Closed document (Cmd-W)
    4) Switched to Chrome
    5) *poof* TextEdit disappeared

exactly what i did. maybe it was changed in ML.

No, Lion exhibits this behavior for me. Close last TextEdit window, switch to another app, see TextEdit silently go away from the dock.

how long do i need to wait to observe that behavior?

It's immediate. Doesn't happen on Snow Leopard, for me.

The TextEdit behavior might actually be the OS silently closing an unused application that implements the necessary hooks for saving state and indicating when clean-up is required on termination. That behavior was introduced in 10.7, but IIRC, can be disabled by the user.