Feeds update on a heartbeat, say hourly, plus a deviation trigger, say any 0.5% move. If the publisher's nodes fail, the chain congests, or gas spikes beyond what the update budget covers, the last value simply persists while the real market runs.
That gap is exploitable and dangerous in both directions. Borrowers can take loans against collateral whose true value has collapsed, leaving bad-debt, while holders can be liquidated on a price the market has already reversed away from. Several incidents have followed exactly this pattern during chain outages.
Well-built contracts check the timestamp on every read and refuse to act on data older than a threshold, pausing rather than guessing. When reviewing a protocol, whether it checks freshness at all is a fair proxy for the care taken elsewhere.
Related: oracle, twap-oracle, on-chain-liquidation, bad-debt