>>38037234I get the feeling that they're in some sort of "hypersleep", but they still retain a certain amount of autonomy. In the ashnime, some Pokémon can get out of their Pokéball on their own, like Jessie's Wobbuffet (though that could be the Poké Ball malfunctioning and just letting Wobbuffet out in the worst moments possible)
IIRC (I haven't played BW in years), N considered Poké Balls to be prisons of some sort.
The thing about transforming them into data makes sense considering the way they're stored, and how they basically transform into a flash of light as soon as the Poké Ball opens up.