The decision did not come as a surprise, but it is always sad to see an airline go. After the European Commission declared that the financial support given to Estonian Air by the Estonian government was illegal the airline immediately took the decision to stop its operations and declare bankruptcy. From today, 8 November 2015, all aircrafts are grounded.
Based on what has been communicated from Estonian Air it seems like they will do their best to refund and rebook passengers, at least for the next couple of days, but of course you never know in these situations. It seems like a new Estonian airline will start operations very soon after the collapse of Estonian Air, initially to be named Nordic Aviation Group.