Conditional function handle implementation blocks even when not executed?

I'm trying to understand function handles

function foo(test)
if test
   sqrt = @(x) x.^3;
end
disp(sqrt(3))

The redefinition of sqrt (analogous to something needed in a more complicated case) appears to be somehow "blocking". If the conditional is false, it blocks the standard definition of sqrt without actually implementing the substitute.

>> foo(0)
Undefined function or variable "sqrt".
Error in foo (line 5)
disp(sqrt(3)) 
>> foo(1)
    27
>> sqrt(10)
ans =
    3.1623

I understand there are work-arounds for this, but was wondering why this is?

Tested in R2012b and R2014a on Mac OS X 10.10.3.

[Walter Roberson]

Interesting.

Question: is there an "end" matching the "function" statement in the actual code?