This mod uses a flag in the guard entity struct that makes the player an infinite target. It is normally used in jobs such as Silence the Alarms and Rip-Off the Ruby. In the mod, the flag is given to every single flashlight guard and swarmer guard as well as special enemies (snakes, moles, bears).
The mod will never stop spawning new guards (up until the entities' own spawn limits). In vanilla gameplay, both Sly 2 and Sly 3 disable all new guard spawns while you are being chased.