servos, steppers, limit switches

i'm in the process of converting my taig to servos...and someone told
me i don't need limit switches on a servo setup although the stepper
setup has one at the max-value of each axis. the wiring diagram for
the servo setup shows the limit switches wired in series with the e-
stop switch.

My first stupid newbie question is, how does a servo system ever do
a 'home' command to find out where it is without limit switches? Or
does it just run to the end of travel and drop out when the encoder
stops encoding, then you set your known value for that axis to that
point, knowing the mechanical limits? Like, for example, if I know
my x-axis travel is 12 inches, do I just run it til it is against the
stop and when it stops, I set x to 12 in the program and call it done?

Thanks in advance.

Brian