Hi @MMS Technology Service •
The functional level defines the minimum version of the OS can be used to install domain controllers. This means that a member machine can be installed by an OS version lower than the functional level. So ,when the functional level is Windows 2016, you can have domain member machines with the Windows 2012 R2 version.
Regarding your question ,my answer is Yes , your SQL server under Windows 2012 R2 will still working after functional level upgrade to Windows 2016.
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