Failover in RAC

How does the failover take palce in the oracle r2 rac.
Suppose an update is runing from node test1 and after the half way run the node test1 dies what would happen then.? Does the update rollback or the session failover to the available node in the cluster and the update will continiue from where when the test1 had crashed.?  
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originally any DML will be rolled back, now there is a new feature TAF

While the concept of failover is simple, providing an apparent instant failover can be extremely complex, because there are many ways to restart in-flight transactions. The TAF architecture offers the ability to restart transactions at either the transaction (SELECT) or session level:

SELECT failover. With SELECT failover, Oracle Net keeps track of all SELECT statements issued during the transaction, tracking how many rows have been fetched back to the client for each cursor associated with a SELECT statement. If the connection to the instance is lost, Oracle Net establishes a connection to another Oracle RAC node and re-executes the SELECT statements, repositioning the cursors so the client can continue fetching rows as if nothing has happened. The SELECT failover approach is best for data warehouse systems that perform complex and time-consuming transactions.

SESSION failover. When the connection to an instance is lost, SESSION failover results only in the establishment of a new connection to another Oracle RAC node; any work in progress is lost. SESSION failover is ideal for online transaction processing (OLTP) systems, where transactions are small.
Oracle TAF also offers choices on how to restart a failed transaction. The Oracle DBA may choose one of the following failover methods:

BASIC failover. In this approach, the application connects to a backup node only after the primary connection fails. This approach has low overhead, but the end user experiences a delay while the new connection is created.

PRECONNECT failover. In this approach, the application simultaneously connects to both a primary and a backup node. This offers faster failover, because a pre-spawned connection is ready to use. But the extra connection adds everyday overhead by duplicating connections.

Currently, TAF will fail over standard SQL SELECT statements that have been caught during a node crash in an in-flight transaction failure. In the current release of TAF, however, TAF must restart some types of transactions from the beginning of the transaction.

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