I came across the term "power-fail interrupt" on Wikipedia here.
Since power-failure occurs instantly, what is the use of this interrupt? By the time the computer realizes it has encountered a power-failure, it'll be switched off! What's the point of it? Also, this interrupt is given the highest priority.
Have I misunderstood the term "power-fail"?
After a power failure, the computer can remain on life support using reserve power (such as a battery).
The article you quote talks specifically about the VAX architecture. The way the power-fail interrupt works there is as follows:
Once a power-failure interrupt has been posted, the processor has approximately 4 milliseconds before power is shut down.
Thus the interrupt handler has four milliseconds to do its thing.