That's because it's not mentioned in their TOS what happens if a user doesn't have enough GH/s except for "not eligible for hardware redemption." What if I don't have enough? What happens to it? Do we get a refund based on the current market price? Do we convert it into something else?
I see what you mean now. The hash that hasn't been used to exchange for physical machines will probably just be gone, as the machines are retired and Hashnest has no legal obligation to offer a refund (which they won't) or an option to trade up multiple S7 hashes for a single S9 hash (very unlikely). So I would always assume that the hash that doesn't add up to a full physical machine is gone, since this isn't just the worst case, but also the most probable scenario. It would be nice if they'd just let us trade up old S7 hashes for a smaller amount of S9 hashes, but as I've said, that's very, very unlikely. They would miss out on a lot of profit by doing that..
If you go strictly by their ToS, the hash that hasn't been exchanged for physical machines will just sit in your account ... but won't do anything. You will still have the hash, but it won't mine for you, it will be a useless number in your profile. Whether Hashnest will allow you to exchange that number for S9 hash is pure speculation, but they really have no reason to (legally).