Auto-Healing does not change the instance of the app. whenever the configured condition criteria is met, Auto-healing recycles the worker process serving the requests on the same instance.
Whenever the process is recycled via Auto-healing, a new w3wp.exe will spun up and will start picking up new requests that are currently in the HTTP.SYS queue. The in-flight (requests that are already picked up by the old worker process) are allowed to finish gracefully and then the process is allowed to exit. The old process is given 60 (or 90 seconds, need to check) to exit and if within that time the process has not finished serving all the in-flight requests, the process will be terminated.