Excellent question. I had to read and re-read BOL to get it right. Seems that sequences with default values are tricky to understand, but I found that reading the specific points make sense to their behavior.
From BOL (http://msdn.microsoft.com/en-us/library/ff878091.aspx):
START WITH <constant>
The first value returned by the sequence object. The START value must be a value less than or equal to the maximum and greater than or equal to the minimum value of the sequence object. The default start value for a new sequence object is the minimum value for an ascending sequence object and the maximum value for a descending sequence object.
INCREMENT BY <constant>
Value used to increment (or decrement if negative) the value of the sequence object for each call to the NEXT VALUE FOR function. If the increment is a negative value, the sequence object is descending; otherwise, it is ascending. The increment cannot be 0. The default increment for a new sequence object is 1.
"El" Jerry.