This is part of a project I am working on but wanted to ask this question by itself. I have setup failover interface option and when I run "ifdown wan" it will failover to wwan (wlan0) but if I simply disconnect the cable from wan (eth0) it will not failover to wwan (wlan0). Not sure why that is. It does show the port is down.

Use MWAN3 package.

https://forum.openwrt.org/viewtopic.php?id=39052

Download here:     http://www.mediafire.com/folder/fvd0r4i8n4ikg/mwan3

Thanks I will try this when I get home

general problem to detect interface status depending much on driver

there are some solutions incl. watchdog/cron ping gateway/internet and /or watch traffic

ref:

https://forum.openwrt.org/viewtopic.php?id=49888
https://forum.openwrt.org/viewtopic.php?id=49440

search : interface status detect up down
brings you more

at the moment activation of  interface(dhcp) is detected in getting a dhcp-response
to a dhcp-request send by udhcpc which triggers /lib/netifd/dhcp.script

IMHO there is no mechanism to detect interface down/inactive through hotplug / netifd
Though some drivers do send log-messages with interfacestatus-change (ramips chipsets)

regards
3zl