Does time pass on a Minecraft SMP server if nobody is logged on?

Time in the sense of day/night cycle and weather passes while no one is on, however in all other senses time doesn't pass in a given chunk unless a player is online and nearby enough (although for a small set of chunks near the default spawn, "nearby enough" is anywhere in the Overworld).

Chunks do not update with no one around so I created a character called "updater" to just sit inside of my server. This will allow chunks to be updated, even if no one is on the server.