When the controller dies or loses connection, most boards will slowly transition into full brakes, bring the board to a smooth stop. This is standard on Hobbywing, I think, but on VESC you need a remote with a receiver that supports connection loss being detected, which the VESC can then be programmed to react to.

As for dropping it, that's why you USE THE LANYARD.

The control wheel has to be held for the board to maintain speed or start braking, so when dropped, at first it will just stop doing whatever it was doing and begin coasting. Once you get out of range, same thing as any other disconnect, it starts braking on its own. The range can be kind of far, depending on the board, so this is really not something you want happening while going downhill. If you use the lanyard tho, it's not gonna happen.

I've had no malfunctions. And while I know this is how it works, I haven't had to rely on it even once.