I last played in 2023. When my death backpack fell through the terrain and became unreachable again that was the final straw and I uninstalled. Now I went through all the patch notes since then and no fix is noted. The only archived one that I found was from 2019 and that clearly didn't last. So this is still happening in this game?
Yes most bugs like that are still happening. You can use godmode to get it back or change the difficulty settings to not drop anything on death but of course that is just a workaround.
If the Death backpack is causing a problem why even bother with it, Eleon should simply return the player state at instant of death but full stats to wherever.... bed, home, tent, hospital! That way all would be good and the minor inconvenience of losing a battle would be a thing of the past.