After calling service.subscribeToStreamingNotificationsOnAllFolders(..) and registering a disconnect handler, the handler gets called when the stream disconnects periodically. We are advised to reconnect the stream in the disconnect handler. Question: Is there the possibility to lose events, during the period when the stream is disconnected and reconnected? If so, how does the Microsoft EWS design propose to prevent this from happening?
Yes you can (and will) have missed events especially against cloud mailboxes , Notifications are there to provide a signal that you need to Synchronize a folder not as a synchronization method themselves. I'd suggest reading https://learn.microsoft.com/en-us/exchange/client-developer/exchange-web-services/mailbox-synchronization-and-ews-in-exchange which describes the recommended sync patterns to use.