If a water heater blows up this would have been caused in a closed system, (meaning no place for water to expand to), this will happen when there is no pressure/temperature valve on the heater, (called a T&P Valve).
The T&P valve protects the heater from those two possibilities, the T&P valve will trip at the temp of 210 degrees, and will trip if the pressure reaches 150 lbs or more.
If you you ever walk into a place and see a water heater trying to bounce or is rocking, then you know there is a major problem. This heater is about to blow.
What does one do when this happens?
1. Shut the power down to the heater
2. Never turn on a hot water faucet, this will cause a surge in the system, and cause the heater to blow.
3. Run like hell.
If you ever see a water heater without a T&P valve on it, do something about it, they can blow up without this device.
Courtesy of Randall Hilton - Water Heater Blast
Courtesy of Myth Busters - Water Heater Explosion