Sort of, the error indicates that the router can't communicate with something further up the chain, in FTTP that usually means the OLT at the exchange. The physical link is up but the communication is failing after that point. I've seen it on FTTC too where again the physical connection is up (it's in sync) but there's a communication failure somewhere between the DSLAM and BRAS (again usually at the exchange).
We've seen various reasons and fixes, one of the easiest way to replicate it is to unplug the router from the BT modem without clicking disconnect and then plug a different router in. The BT modem will see the PPPoE connection as being up still while the router won't and then give that error because it can't communicate with the BRAS as that too still sees the PPPoE up. If you wait for the PPPoE timeout to kick in then it'll reconnect.
Of course that's not the most common time you see it but if you think about what happens in an MSO situation or the times that you see it, in a lot of them the PPP has dropped but some part of the chain between router and ISP hasn't seen it drop yet and still thinks it's up. Factory reset might fix it but it's probably more likely that the time it takes to factory reset, reboot the BT modem etc. is pretty similar to how long it takes for the PPP to timeout so waiting will probably fix it too. And in those cases that waiting doesn't fix (and neither does a factory reset) there's probably a fault with some of the kit between exchange and ISP.
Dave Tomlinson
Enterprise Architect - Network & OSS
Plusnet Technology
