As you all know
(UPDATE emp SET mgr=7654 WHERE empno=7698)
START WITH mgr IS NULL
CONNECT BY NOCYCLE prior empno=mgr
ORDER SIBLINGS BY mgr
Neither Martin nor Blake is ever reached in the hierarchy. You've made them mutually related, but no longer in any chain that you are selecting, because of the start condition.
The connection criteria is that
prior emp = mgr so based on that they are related, but neither is now linked to anyone else above them. They form their own little island, and that island doesn't match the
mgr IS NULL start condition. Or if you prefer, if you start from any record where
mgr is null there is no path down to either of these records.
If you removed the start condition you would see a lot more data you don't want, but that would include Martin and Blake and would show the cycle flag for them.