Docker Nginx stopped: [emerg] 1#1: host not found in upstream

Just adding a resolver did not resolve the issue in my case. But I was able to work around it by using a variable for the host. Also, I guess it makes more sense to use Docker's DNS at 127.0.0.11 (this is a fixed IP).

Example:

server {
  listen 80;
  server_name test.com;
  
  location / {
    resolver 127.0.0.11;
    set $example dev-example.io:5016;
    proxy_pass http://$example;
  }
}

I found the variable workaround on this page.

Include to prevent Nginx from crashing if your site is down, include a resolver directive, as follows:

 server {
       listen      80;
       server_name     test.com;
       location / {
          resolver 8.8.8.8
          proxy_pass         http://dev-exapmle.io:5016/;
          proxy_redirect     off;
 ...

WARNING! Using a public DNS create a security risk in your backend since your DNS requests can be spoofed. If this is an issue, you should point the resolver to a secure DNS server.

This usually means that the dns name you provided as upstream server cannot be resolved. To test it, log on nginx server and try pinging upstream server provided and see if the name resolution completes correctly, If its a docker container try docker exec -it to get a shell, then try pinging the upstream to test the name resolution. If the contianer is stopped try to use IP address instead of dns name in your server block.

proxy_pass         http://<IP ADDRESS>:5016/;

You can also use the resolver directive if you want to use different dns server for this location than the host system:

resolver 8.8.8.8;