Two things: the data on the instance will be gone.
The posts/comments that were replicated on other instances will stay, but they will be defederated, meaning they will not ever be synced up woth other instances' replications of these posts/comments. Every instance will just have their own, insular copy.
I see this as a big issue for content going forward. I get that reddit is one single point of failure but I wonder how you can keep knowledge in a static state when most instances lose money and it's a hobby. What happens when the owner grows tired.
Could also be an issue from a data privacy perspective. If I want to delete comments I left, but the instance I made them on has shut down how can I delete them?
Perhaps each client should keep data. Something like a blockchain, with redundant copies stored on clients and clients using some consensus protocol to agree on what the real history is.
Number 2. They will stay without updates unless an admin cleans it manually. It wouldn't be hard to build a bot to do that automatically, but by default it will just stay.