This behaviour has changed since that book was published. I am writing this additional answer to make it clear how Mathematica 9 searches contexts for symbols and that even the current version 9 documentation is incorrect in describing this.
###How symbol lookup actually works
When you enter a symbol name such as x, Mathematica will check if a symbol with this name already exists. It will first search the contexts from $ContextPath for x, one by one. If it doesn't find it there, it'll search the context from $Context for it. If it still doesn't find it, then it will create a new symbol named x in $Context.
Thus $ContextPath controls where to look for symbols, while $Context controls where to create new symbols.
Your observations are explained by these rules, noting that Begin will change $Context only but not $ContextPath. Note that BeginPackage will change both $Context and $ContextPath.
###Warning: the documentation contains an error
The $ContextPath documentation states that
$ContextPathis a global variable that gives a list of contexts, after$Context, to search in trying to find a symbol that has been entered.
In fact $ContextPath is searched before $Context in the current version.
In old versions this was not the case, as the Wagner book describes. I don't know when the change happened.
The Contexts tutorial does correctly state the order of search in the current version:
Since
$Contextis searched after$ContextPath, you can think of it as having "." appended to the file search path.
