The battery life is around 3 years. However, the battery is only used for the active RFID tag.
The magic bands contain both active and passive tags. The passive tags don't need a battery. That is used for the things you hold the band up to like your room door, park entry, or FP+. So, it would always work for that.
The active portion would be the things that your band isn't directly scanned for like finding you at Be Our Guest, or automatically adding your ride photo to your Memory Maker account. These things wouldn't work when the battery goes out.