From Wikipedia
"The Apple M7 co-processor collects, processes and stores sensor data even if the device is asleep, and applications can retrieve data when the device is powered up again. This will reduce power draw of the device and save battery life.[5]
The M7 is accessible to applications through the Core Motion API in iOS 7, so it will, for example, allow fitness apps that track physical activity and access data from the M7 without constantly engaging the main A7 CPU. It will enable applications to be aware of what type of movement the user is experiencing, such as driving, walking, running or sleeping.[6][7][8] Another application could be the ability to do indoor tracking and mapping.[9]"
The M7 just collects sensor data the M7 is not a sensor. I believe only a sensor can track movement.
Without the M7 movement can be tracked but the power draw would be solely on the A7.