Having all your sensors fail is actually a very easy case. Imagine if all of your sensors failed: suddenly you could not see, hear, feel, smell, or taste... do you think it would be hard to tell that something was wrong?

Having your sensors fail doesn't mean they're not providing data. It means they're not providing accurate data. In humans, we would call this hallucinating, and humans in fact cannot generally tell that they are hallucinating.

> Having your sensors fail doesn't mean they're not providing data.

That is one possible failure mode. But you're right, it's not the only one.

There is an extensive literature on how to detect and correct sensor errors resulting from all kinds of different failure modes.