An overheated water heater can be very dangerous because it has the potential to explode. A common cause of explosion due to overheating is a malfunctioning pressure and temperature release valve.
The temperature and pressure release valve allows excess heat and pressure to be discharged from the tank. If the hot water heater is not correctly and regularly maintained, the valve and other components can malfunction and lead to temperatures high enough to cause explosion. It is when the temperature increases beyond 212 degrees F, the boiling point of water, that explosions result. It is recommended not to allow heater temperature to rise even above 180 degrees F. Water heater explosions are extremely rare.