Here's my definition of Crunch Mode or at least, how I perceive it.
During normal development of a game, there are certain procedures in place for development. You have a game design document that serves as the bible for the game and everyone is assigned to do pieces of it.
If changes want to be made, then people submit that to the game designer who, if approved, typically from having a meeting with other designers, is then assigned back to the senior producer/project manager to then get it developed.
In crunch mode, you go into more of a triage because things have to move a lot more quickly and the hours are a lot longer. Time is a premium.
Let me give you an example:
In Demigod, if a player controls 60% of the flags, I wanted that player to get a big bonus to their warscore income. The goal being to make the games end pretty quickly if someone is controlling the arena. Normally, I would submit this request to our publisher liason who would then include it on a list of requests to the lead Designer Mike Marr. If he agreed with it, he would send a list of approved changes to Bart, the Senior producer who decides what can and can't be coded. Assuming the change falls within the game's scope and budget, he would assign it to a developer's task list to work on -- typically a developer who is involved with that code.
Because Mike Marr and I basically share the same brain, we almost never (actually we have never disagreed) disagree on a design element of Demigod. and because Bart and I are both software developers and know about scope we are able to streamline things.
So I am out there in GPG's studio and would walk over to Shana (I hope I spelled her name right, she's a great developer) and said "I want to give a big bonus for players who control 60% of the flags to their war score income. Find the code, let's put it in right now." And it goes directly in. Time to implement: less than 2 minutes.
But you can't realistically do a crunch mode at the start of a project. And most publishers and developers don't get along like GPG and Stardock.
Crunch mode also means lots of extra hours sometimes to quickly get in features and changes that need to go in for it to be good.
However, it doesn't mean the same thing to a Stardock or GPG as it would to a publicly traded company.
For instance, we decided we wanted an extra month to implement beta user feature requests. That moved the date from March to April. No big deal right? Well, no, because April is the second FISCAL quarter of the year. And to a public company, that changes all their numbers. But to a private company, it means nothing. So it's a lot easier for us to push dates back. So our crunch modes tend to be a lot easier than other companies.
Hope that answer helps.