Jeff, actually I think you just described DRAFT control - tractors that have it have a type of sensing that works off the toplink, so that when the toplink is pulled on harder, the hitch will raise a bit for a short time, then when the tension on the toplink lessens the hitch will lower again, back to whatever POSITION the hitch has been set for. Draft control is normally only used for ground engaging implements such as plows, etc -
Most tractors have POSITION control on the hitch, whether they have DRAFT control or not - compacts as a rule are less likely to have draft control.
Position control works by moving a balance beam of sorts inside the hitch housing - when you move the position lever, you disturb the setting of that balance beam, and when you LOWER the position control, the hydraulic controls then dump fluid out of the internal cylinder that raises the hitch, therefore allowing the hitch to drop.
When the hitch drops enough to re-establish neutral setting on the balance beam, the position valve is closed, and no more fluid is dumped so the hitch stops lowering. Raising the control disturbs the balance again, and it ADDS fluid to the internal hydraulic cylinder, raising the hitch.
A typical problem with position controls is if the internal cylinder's seal wears out - when that happens, the hitch will drop due to the leak - then it gets low enough that balance is disturbed, fluid is pumped into the cylinder, it raises til it satisfies the position control and stops - then it bleeds down again, and repeats. The more weight on the hitch at the time, the faster this happens and the more the hitch bounces, or chatters.
Usually there is also a "speed" control on the hitch, normally found under the seat - this is used to taylor the hitch's reaction time for different implements, and if it is "slowed down" TOO much it can lock the hitch in position. A fair amount of times people think their hitch is broken, when it's just been played with by their kids.
That's my understanding of the different hitch controls, HTH... Steve