I'm not sure what you mean by 'value ...is removed' (if you mean from the front-end drop-down - ie. de-selected; or if you mean removed from the field configuration).
If I have 2 Update On entries it is not working. If there is only 1 Update on entry it appears to work fine.
And when there are 2 Update On entries, when the element is first displayed (rendered) it displays the 'matching' (condition) value first (in Field 4), and then it renders the conditioned field (Field 5) and then the element (Field 4) changes to display the last value in the query (leaving Field 5 still showing).
If ANY value is actually (manually by user) selected in Field 4 then Field 5 behaves as it should (shows on values matching the condition, hides when values do not match the condition).
So it seems like having to 2 Update On entries messes with the conditioning process.
BUT ON TRYING TO TEST IT AGAIN ....
I re-added the 2nd Update On entry, and now it appears to be working fine!
So I'm guessing that at some point however those Update On options are generating actions, it got messed up (those were added over a month ago and many nightly releases ago). And possibly something wasn't quite right.
But now, by just removing one and re-adding it, all seems to work properly.
So I think we can now close this as an 'anomoly' that IF anyone else has it could be resolved by just removing and then re-adding one of the Update On entries.
(unless you can think of any other reason why this might still be an issue).