All this change in nginx does is allow WebSocket connections to be proxied, so your questions don't really make sense. WebSocket's work like TCP sockets, and your backend server still needs to manage the socket directly. For example, Unicorn is not a WebSocket server, though there are WebSocket-capable servers derived from Unicorn (e.g. http://rainbows.rubyforge.org/).

If your backend dies or drops the connection, the WebSocket closes, and the client will have to reconnect. If it was just dropped, you can use nginx's ip_hash proxy option to send the reconnect to the same backend server, but it would be a new WebSocket, and the client/server will have to recreate the session state.