play.api.db.Database.withTransaction has a problem when a JDBC connection dies mid-transaction: it reports java.sql.SQLException: Connection is closed, and not the error that actually killed it.
The real cause never reaches the caller, and it never reaches the application logs either.
Both overloads are affected: the one taking an isolation level, and the one without.

The transaction itself is handled correctly, and every reproduction test checks that nothing was committed: the server rolls it back as soon as the connection goes away, whichever end of the socket failed.
What is lost is only the diagnosis, and it disappears precisely when a database starts misbehaving, in other words, at the very moment where a clear error message would be most valuable.

Reproduced with Play 3.0.11, MariaDB 11.4 and the MariaDB Connector/J 3.5.10.

Side note on H2 limitations

The project is tested exclusively against in-memory H2, which has no socket to time out, and no server to drop a session.
Neither the rollback() that withTransaction performs on the way out, nor the setTransactionIsolation() of its finally block, can ever throw there.

A fix can be tested against the following reproduction repo: https://github.com/bursauxa/play-sql-timeout-repro
But it bootstraps a TestContainers instance, so I am not sure it is worth it to keep in the in-project test suite.