I've had numerous temporary disconnections (due to problems on my end, not the server).
Usually, if I'm at a station, all other players and ships (including mine) will disappear, and I can't interact with anything until connection is restored.
If I am travelling a the time, then it can be a problem.
In my experience, your ship disappears, but you maintain momentum, so you can end up travelling quite some distance before the space drag mechanic stops you. If this happens, I have to stay still until my connection is re-established, or risk losing my ship due to not being able to find it.
When re-connected, the ship will reappear in the exact spot it disappeared in, not moving. I then have to travel back to it (assuming I can find it) using the endo float/fly speed (really slow). Once I get back to the ship, continue on as normal.
However, when I exit the game and then re-enter it, regardless of where I logged off last, I will be spawned at the location of the disconnect. A couple of times this has meant that I logged off at a station, and logged back in in the asteroid belt without a ship. When this happens I just have to use the 'insurance transfer' (basically a teleport function) to return to a station.
Any money I made or inventory changes keep. I don't lose any material.
However, in one instance I linked to the insurance terminal at a station i hadn't been to before after a temporary disconnection, and when I exited and reentered the game, I was spawned at the site of the disconnect (between two stations) and lost the insurance terminal link.
So, in a nut-shell, it's not too terrible if a temporary disconnection occurs. You can just wait to reconnect, get back in your ship and keep going, but currently the server doesn't keep track of your location at your next log out, or whether you've linked to an insurance terminal (probably other things too but I haven't done extensive testing). Even if you do lose a ship, you can just do a recall on it at any station (does cost credits to do this).
I think the problem is that the server treats a disconnect as you logging off, and marks your location, but it when you reconnect, it doesn't treat that like logging back in, so your last known location for the server is where ever the disconnect happened, rather than where you actually log out.
Best way to avoid this problem is probably to quit the game if you lose connection and rejoin when you get connection back. You should simply spawn in at the location of the disconnection, and ships don't despawn (I think they do but the timer is like weeks or months) so your ship should be waiting for you.
If you're in someone else's ship with them and lose connection though, you're basically screwed, unless your friend notices, stops the ship and waits for you to reconnect. Otherwise their ship will just fly off without you while you've lost connection.