Haven't seen this reported anywhere, so...if Eder is wearing his armor, that grants the "Second Chance ability" (don't know if there is anything else that grants this) and is the last party member knocked unconscious, the game will end, even though he pops immediately back up. Was a little frustrating, because he would have won the battle on the next hit.

Yeah, if you lose all members the game ends. In order to trigger Second Chance, the party member has to "die" and there's no expection for the skill afaik. It seems to be working as intended.