In this demo setup, if Host 1 doesn’t work, Host 2 (2 orderers + 2 peers) should still handle chaincode invoke. The problem is that if your endorsement policy requires Org1, then chaincode cannot be successfully invoked as endorsement policy is not satisfied.

In real life, a better setup should have further split each host into two, each of which keep one orderer and one peer. In such a case, if one host is out-of-service, the whole network should still working.

cheers, kc