If the weak students throw in the towel, the 2nd ranked student is worse off than the 1st ranked but only a little, no way it means game over.
We need a lot of maths to understand how this works. The three basic rules are (1) the 1st ranked gets their internal mark adjusted to match the cohort's highest HSC exam mark, (2) from 2nd ranked down get adjusted such that the cohort's total internal marks equals their total exam marks, (3) they are also adjusted proportionally (quadratically not linearly) to the spacings between their internal marks.
An example: internal marks 1st ranked 90, 2nd ranked 88; exam marks highest 91, total pool only 3/4 (exaggerated) of total internal.
Rule (1) 1st ranked internal mark is adjusted from 90 to 91
Rule (2) on its own would adjust 2nd ranked internal mark from 88 to 66 (being 3/4 given above)
Rule (3) says 2nd ranked was only 2 internal marks below 1st it can't now be given 66 vs 91. The quadratic formula they use will probably come out to about 85.