When you run the example, you would see how the program writes a Date object per second and also the message indicating that the FileClock thread has been interrupted.
When you call the sleep() method, the thread leaves the CPU and stops its execution for a period of time. During this time, it's not consuming CPU time, so the CPU could be executing other tasks.
When the thread is sleeping and is interrupted, the method throws an InterruptedException exception immediately and doesn't wait until the sleeping time is finished.
