I replaced all four pads and rotors on my 2001 VW Passat (~140k miles) about 4 weeks ago, with PowerStop Z23 pads and rotors. During bed-in, I took the car down a steep hill, and got a lot (too much) heat in the brakes. This was after about 10 accelerations, and 10 stops back down to ~20 mph on a steep downhill. As I got to the bottom of the hill, I lost braking entirely, and while the pedal still had pressure, it felt like braking against a repelling magnet, in that pushing the pedal could barely slow the car.
My assumption is that was a perfect example of brake fade, and after letting the brakes cool for 15 minutes, full braking performance returned.
Fast forward 4 weeks, and I took a trip up into the mountains - note that the brakes were fine on the way up, and I didn't do any "performance" braking on the drive. Took the car out first thing in the morning, and I got the exact same pedal feel, and lack of breaking performance that I described above, except with cold brakes. I started the car, and the brake pedal immediately felt like I described above - not falling to the floor, but not firm. Pumping the brakes didn't change the pedal feel. I drove very cautiously for a few minutes, tested the brakes a few times, and after ~5 min of driving they started to feel normal again, and didn't have any further issues on the trip.
I also noticed a small amount of brake fluid sitting on top of the reservoir under the hood, although there is no apparent leak.
Is it possible this problem is caused by the reservoir being overfilled? (I did leave it open and remove excess fluid when resetting the pistons, however, it is still very full). Or is it possible that the original event during bed-in and this are related, and a sign of a bigger problem, like a failing master cylinder? Is it possible the brakes need to be bled? I would think it would be a persistent issue if they do, but I don't know for sure.
Also from this post on PassatWorld:
This was due to a reservoir breather blockage. Possibly caused by overfilling, the fluid could block the strainer holes and the gap around the strainer, air pressure would prevent the flow into the reservoir
This post doesn't address the braking performance, but I think it does mean I should double check that the reservoir is not over full.