On-hold stock is the total stock reserved for the orders in 'Un-paid ' and 'Partial' state i.e. 'Problem Orders' state. It is not counted under marketplace stock and is not considered as sellable.
In case of Unpaid Orders, if the stock is available i.e. order is fulfillable, then the stock will be deducted and will not be counted as On-Hold stock.
However, sufficient stock is not available, the the order quantity will be held as On-Hold stock.
Hope this answers your question.