What happens when a Trezor is lost? Trezor is one of the leading implementation of a hardware wallet. Its first generation won't support multisig ... because the Bitcoin network itself doesn't have strong multisig support.

What happens if a Trezor is lost or stolen? Where are the private keys it guards backed up? Is a password required to release funds stored on it?
If I remember correctly, the Trezor uses deterministic wallets, as specified in BIP 0032.  That means that the device will give you a sentence that the wallet can be regenerated from, in case it's lost.