I'm not familiar with the quest, but the general principle is that whenever you exit a "town" area, you are given a world of your own, called an instance. What is in the instance is determined by the location and the quests you have active, but is reset every time you enter the instance.
You seem to be describing a quest, during which you must defend or escort the NPC. Well, while you have the quest active, whenever you enter the instance, the quest NPC will be there, ready to proceed with the quest. If he is killed, you cannot complete the quest, but you can simply return to town and start again.
Also note that only the party members are resurrected when you are all killed. Allies never are, and you will actually see them running back to you from the fight's location.
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