"Pulling punches" is a term concocted by some so-called "masters" in support of their own theory of punching. Punches are not pulled; they are focused. A punch stops because it reached the limit of its travel, not because it was stopped short. Using focus, that stopping point is adjusted to be just before, on, or just beneath the surface of the target. In all three cases, the punch is delivered with full power and speed.
Every punch, no matter the martial arts style, must come to an end at some point. Overextending the distance of that point adds nothing to the punch. In fact, it diminishes the power of the punch. As humans, we cannot exert maximum power over a long distance. Look at power lifters, they exert maximum power to get the weight moving and then use some reduced level of power to keep it moving. Also, due to the mechanics of the body, maximum force cannot be exerted from all positions of the body. For any given position of the body, there is a point in a specified direction where maximum force may be applied. When punching, we try to ensure that that point is at the point of our focus.
After impact and a short penetration, a punch becomes a push. A push does no further harm; it only pushes the opponent off balance, upsets the stability of the puncher, and exposes the puncher to counterattacks as the arm is extended.
Consider this. A car is stopped at a stop sign. A speeding truck hits it from behind. What happens? The rear of the stopped car begins to crush and the car is jolted forward. At some point, the crushing stops and the car is pushed forward by the truck until all the energy of the crash is exhausted. Once the car starts moving forward with the impact, the damage stops. If the car does not strike anything else, it is not damaged any further, no matter how far the truck pushes it. As for the driver of the car, his or her only chance for serious injury is at the moment of impact, which is why an air bag inflates and deflates in a microsecond.
The same holds true for a punch. Once the body deforms from the initial instant of impact, it starts moving with the punch and is not harmed any more. Boxers wear gloves. They must punch through the absorbing material before their knuckles may damage the target, so many tend to follow-through with punches. Bare-knuckled punchers do not follow-through, since it is not necessary. They make short, quick punches.
When students are breaking boards, you hear instructors telling them to punch through the board. This means to focus the punch behind the board so it will flex and break. It does not mean to try to punch through the board and continue the punch until you lose balance or hit the board holders.
As a counter attacker, I love to fight push punchers. When they miss and overextend, I have ample opportunity to counter attack with numerous techniques that score. When a focused puncher misses, the punching arm returns to its guard position so quickly that a counterattack is difficult to get through for a score.