Guidance on rolling update without downtime

copying from https://github.com/Azure/app-service-announcements-discussions/issues/175#issuecomment-768867233

cc: @saibaskaran57

Hey everyone,

Could someone share how could we perform the Platform upgrade from Azure Functions v2 -> v3 without any downtimes?

There are two issues I'm currently facing in terms of the platform upgrade:
1) ARM template changes on `FUNCTIONS_EXTENSION_VERSION` from `~2.0` to `~3` causes downtime with HTTP 503 Service Unavailable
I did a simple ping check(every 100ms) on my Azure functions when ARM template is being deployed. I could reproduce this using both `Powershell` & `Azure resource group deployment` azure pipeline task as show below:

2) I've changed my strategy to upgrade using Functions deployment staging slots first before making a swap. However, the `FUNCTIONS_EXTENSION_VERSION` app settings did not bring forward to production slot during this swap.
Just to test this out, in my staging slot I updated `FUNCTIONS_EXTENSION_VERSION` from `~2.0` to `~3` and created a new app settings called `NewVar`. From the screenshot below, only `NewVar` is brought forward to production slot.

How can we ensure the function app is upgraded with seamless approach without causing service downtime?

Thanks.