The interesting part of this problem isn't noticing that an instance is down. Any load balancer can do that. The interesting problem is noticing than and then informing every proxy in the world.
I feel like a lot of what's happening in these threads is people using a mental model that they'd use for hosting one application globally, or, if not one, then a collection of applications they manage. These are customer applications. We can't assume anything about their request semantics.