SQL Managed Instance - Failover

the following documentation can fully answer your question https://learn.microsoft.com/en-us/azure/azure-sql/managed-instance/failover-group-sql-mi?view=azuresql

but as a summary

When an Azure SQL Managed Instance in the General Purpose tier encounters a failure without a configured failover group, Azure's inherent high availability features come into play, but with certain limitations. In such scenarios, Azure orchestrates the recovery process, which may involve automatically rebuilding and configuring a new underlying virtual machine and reattaching the databases. This process is designed to ensure continuity, but it lacks the transparency and control offered by a failover group. As a result, there might be a short period of unavailability or performance impact during the recovery.

For enhanced resilience and predictable failover management, setting up a failover group is advisable. Failover groups in Azure SQL Managed Instances allow for a more sophisticated, controlled failover process, especially suitable for geo-redundant setups. They enable the automatic redirection of database connections through predefined DNS CNAME records, facilitating seamless primary-secondary transitions. This setup not only minimizes downtime but also offers better control over failover events, ensuring a more robust and reliable database availability strategy, especially critical for applications demanding high availability and minimal disruption.