They very heavily leaned into, "You didn't see his dead body, so he's not dead."

But yeah, we beat him in single combat and then hit him with the Spirit of Haldrath's Dragonfire Dive, direct hit and see him falling backwards. It's one of those situations where he was intended to be dead, akin to Foulques (whose dead body we never see, though we do see him fall off a cliff), but they just sorta gloss over it in Heavensward. In 1.0 it went much the same way, only Coerthas wasn't snowy, Estinien's skin was grey. There's no cutscene afterwards where Alberic muses on hoping Estinien is still out there, living.

The possession. The idea that Estinien stole the eye and was a fugitive. Alberic entirely. Oh well.

Sort of more on topic, I wonder how many baby lancers are confused by Foulques being able to use Ring of Thorns to create ice puddles in the level 30 Lancer fight. We haven't had Ring of Thorns in a long time.