hughlle has it correct. To work around the machine sleeping whilst playing to a speaker outside, I set the sleep when powered to 3 hours. It doesn't work, it sleeps - or, at least, the screen goes black and Spotify stops playing - after (oddly) about 15 minutes. The display off, I note in the advanced power settings, is set to 180m (after absorbing what you posted about display off/sleep amounting to the same thing on the S3).
I wonder if this could be anything to do with the security settings imposed by my connection to work Exchange server. Regardless, I can't see this is anything less than a clear bug: If the secutiry constraints are anything to do with it, I shouldn't be able to select the settings I have, in the same way that I cannot deselect the 'require a password from the lock screen' setting (it's greyed out)