The infinite bounce is what occurs when Jak is stuck on a damage plane with no nearby solid ground to be bounced, or magnetized, back to. Jak's directional momentum is able to be controlled with the analog stick during an infinite bounce in the same way he can be controlled during free fall. The infinite bounce is most notable for making Fire Canyon Skip possible.
When on this damage plane, the game checks Jak's surrounding area for suitable ground collision to bounce Jak to. If no nearby ground collision can be found that is within Jak's range, Jak will continue to bounce and take damage.
Jak can lose all of his health while in an infinite bounce state, but he will remain alive with minimal directional control. This is because Jak needs to be standing on solid ground in order for the game to officially check whether or not he should be alive or not. If Jak loses all of his health during an infinite bounce then suddenly gets bounced to nearby solid ground, the game will check his health value and detect that it is at 0, thus triggering the death animation.