Nope, you haven't done any workload management at all (WLM)
A server, in WebSphere speak, means a JVM. You have created a JVM on which you can deploy J2EE applications. Your server2 will be a separate java process when it runs, separate from server1. If you start them both up, you will see two separate Java processes. If one goes down, well, one goes down. It doesn't effect the other, but it also doesn't mean the running one will step up and take over.
Here's a little tutorial on workload management with the WebSphere Application Server: