Actually you are both correct, sort of.
When mods/admins are marked as Hall of Fame, it usually means that person has retired from their moderator duties. They don't have any moderator privileges at all. The tag is meant as a salute to their contributions to our sites.
Sometimes a moderator will need to take an extended leave due to real life circumstances, vacation, etc. You may see them marked Hall of Fame just so they are not inundated with PMs and questions while they are away. After all, it wouldn't be fair to our users for them to try to contact a mod that wasn't actively listening.
I hope this clarifies any confusion.
Edit: Ben has been marked as Hall of Fame for a while. You can actually see who is HoF on the
group list page. His name isn't the HoF blue color because his display group is still set to a clan rank image.