Question concerning upstream backup servers

How does nginx handle backup servers? For example…

upstream squids {
server 127.0.0.1:81; # squid 1
server 127.0.0.1:82; # squid 2
server 127.0.0.1:8001 backup; # nginx
server 127.0.0.1:8089 backup; # perlbal
}

if both squids fail, How will nginx balance? Will it round-robin both
backups? or will it try the first backup and then move to the next one
if the first backup failed?

Quite interested in this.

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