I am unable to find the exact specifications of how the RAID 1 logic is executed in Ubuntu Server 18.04. More precisely, I am interested in setting up a RAID 1 software mirroring using two identical SSD drives, and would like to know how does the system behave when one of the drives goes bad and shuts down. Does the system shut down as well? If I unplug the bad drive and leave the second one does the second boot the same way the first one does? (eg. does it have the bootloader as well)

With RAID 1, the system should continue after a drive failure with all data intact. The problem, as you figured out, is booting.

The computer BIOS/EFI knows nothing about Linux software RAID (md), however some BIOS and RAID cards have software RAID that is supported by Linux dmraid, if you want to go that route.

Booting from Linux md RAID requires that your BIOS is smart enough to try the 2nd drive if the first one fails - most aren't. Second, you will need to install a RAID-aware bootloader on both drives. Note: Murphy's Law states that it is always the first drive that fails.

A typical way to get around lack of proper support in the BIOS is to have a 1GB or so /boot and bootloader on each drive. The rest of the drives are your mirrored RAID 1 partitions. If the first drive fails and you want to reboot, you can disconnect it and reboot from /boot on the second one. You need to keep the two copies in sync manually, but /boot only changes when you get a new kernel.

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