How does email routing/queuing work?

If an email is sent to a domain that has more than one mx record, and the preferred email handler is down, what exactly happens to the message? Does it queue at the senders smtp server, or does it queue at the next server spec’d by the next mx record? What limits whose messages can be queued on an smtp server, specifically ms iis smtp server? Also, is a backup POP3 server possible?