Yes, you are locked on. When in that mode, you stay facing the enemy and you back up instead of running away. By default, it's turned on and off with L3 (push in on left stick) when you have a target. You can change what L3 does by going to System Configuration > Gamepad Settings (the icon that looks like a gamepad) > Button Configuration.
There's also an option that automatically locks you on when you start auto-attacking something. Check Character Configuration > Control Settings (four arrows icon) > Target > "Automatically lock on target when initiating auto-attack" to see if you have that turned on.