Hitstop occurs during frames where attacks actually touch targets, whether shielded or on a clean hit. It’s called hitstop because it’s a subtle effect where the game is briefly slowed down, helping almost subliminally reinforce for players that contact has occurred. It’s during this period that hitstun shuffling and shieldstun shuffling are possible, allowing the recipient of the attack to influence the direction of their recoil.
For most attacks hitstop is very brief. For high-damage clean hits it’s not subtle at all though! A dramatic red zoom-in highlights devastating hits for a split second before the victim is launched away.