Happily I wasn’t on a flight where it happened, though I’ve had a few “exciting” moments over the years. It is part of cabin crew training.
Battery fires are pretty much always caused by damage, either the gross physical kind of a car accident or a powered chair crushing & rupturing the cell casing, leading to a short circuit and uncontrolled discharge, or a rather more subtle internal damage issue.
Poor charging management (overcurrent, and/or over-, or under- temperature charging) can lead to dendritic growth of lithium “fingers” from the surface of one electrode. In normal operation this does not happen, the lithium ions normally ”intercalate” within the spongy structure of the electrodes, but if they start to plate the outside, and grow outwards, they can and will penetrate the polymer insulating layer between anode & cathode, and will eventually short the cell internally.
This then causes a massive current (the internal DC resistance is of the same order as a lead acid wet cell) and lots of heat, which leads to dissociation of the materials (most of which are flammable) from which the cell is made. The heat sets off adjacent cells, and so it goes on. There’s still a lot of stored energy in a discharged lithium battery, much more than the bit of vapour, and the steel or plastic from which an equivalent petrol tank might be made.
Hard-wired charge management is normal in the auto industry, eBikes, and mobile phones, etc., the key parameters are the voltage, from which the state of charge is inferred, and the cell temperature, and the charging current can be modulated based on these parameters. But it takes up space, and costs money, so lower end products may simply supply a low current and not bother to monitor cell temperature.
They are the ones to charge in a biscuit tin on the patio, whilst you’re watching!
Submersion doesn’t stop the chemical reactions, but it cools the assembly, hopefully prevents thermal runaway & ignition of adjacent cells, and stops the fire spreading to other flammable materials nearby.