Minutes after posting about a brief, single-server outage we saw our entire On Demand and StacKExchange infrastructure go down. This outage lasted for about twenty minutes (about 10:44 to 11:05 EST).
In a nutshell, the previous outage led to a bunch of hung sockets waiting around for replies on our load balancer. Combined with our growing traffic on FogBugz On Demand and StackExchange, this led to file descriptor exhaustion and prevented any new connections from getting established.
I've corrected the load balancer issue by vastly increasing the number of allowed file descriptors and ensured that this configuration will make it into future builds. We're still investigating the original problem.
I'm sorry for the interruption in service. All monitors are green now, so please contact Support if you experience any further difficulties.