If the other thread  is called  before the sleep method then the other
thread will continue processing. But if you have

sleep(x);

methody();

then methody() will be called after the sleeping has finished.

Yes, it passes execution  to other threads..........

This question is not entirely meaningful.
Java threads  are always pre-emptive.
Even if the thread  didn't pass  execution,
other threads would still be executing
and get their share  of the CPU - so you don't
have to worry about it.