If you edit jni/main.h
and remove or comment out the following line:
ANativeActivity_setWindowFlags( state->activity, AWINDOW_FLAG_KEEP_SCREEN_ON, 0 );
The device will be able to enter sleep mode
You can then also remove WAKE_LOCK permission from the AndroidManifest.xml file
I don't think removing the permission is necessary, but there's no need to have it if your app isn't preventing sleep.
I'm still running into a minor issue in Android 4.2.x where if you don't have a screen lock (swipe to unlock/pin/password/etc) and you press the screen off/sleep button, then the app keeps running.
Not sure if this is an AppGameKit issue, or an Android issue though. I've tried it out with a number of non-AGK apps and some stay running, some crash, some pause, some suspend. So I think that it is something Android should address. If not, at least it is common for this to be buggy with other games!