OrangeSVTguy was using a motherboard that was advertised as a premium overclocking board, but used a substandard VRM system for the CPU. So when SVT overclocked his i7 too far he overloaded the VRM and a mosfet transistor failed shorted (think of it as the transistor getting stuck in the "on" position).
This resulted in a short circuit that allowed current to flow unimpeded through the voltage regulation module. The huge amount of electrical current caused the motherboard and the PSU's EPS12V motherboard connector to catch on fire and melt.
While the problem was caused by the motherboard, the power supply's protections should have kicked in and shut the PSU down before serious damage was done.
Why didn't the short circuit protection (SCP) cut in when the short circuit happened? Because SCP only protects against a certain kind of short, a short to ground, where a short occurs resulting in a circuit with negligible resistance. In such a situation, the resulting current approaches infinity. The PSU detects the huge demand before it even tries to supply it, and shuts the PSU down.
In this case the short circuit had enough resistance the SCP didn't kick in, but not enough resistance to limit the current to safe levels.
The protection that SHOULD have engaged was the over current protection (OCP). But it didn't. Why? Because his PSU (Ultra X4 1600W) is a single rail power supply.
Over current measures the amount of electrical current traveling through a set of wires on a power supply. You have a different OCP circuit for each voltage supplied by the power supply; +12V, +5V, +3.3V, etc. The +12V, however, is a little special because it usually delivers about five times as much power as any other rail.
How many +12V "rails" a PSU has has nothing to do with the PSU's technology or reliability or efficiency or its ability to provide clean and stable power, or anything like that. 99.999% of the time (there are like five consumer PSUs that are different) the number of rails a power supply has refers to the way the over current protection is configured.
A single rail power supply either has ONE over current protection circuit monitoring all +12V wires leaving the PSU, or else NO (ZIP NADA NONE) OCP for the +12V rail at all. A multi rail power supply naturally has MULTIPLE over current protection circuits, each one monitoring a different set of cables leaving the PSU.
Over current protection is slower than SCP, but faster than OPP (over power protection), and fulfills the roles of both. If a power supply is pushed past its capabilities, or if a short circuit occurs that SCP cannot detect, the OCP will cut in and shut down the power supply.
However, OCP has limits. The higher the maximum current the OCP allows the slower its response time is. OCP is essentially instantaneous for settings up to about 30A (30 amperes of electrical current), and is still fast enough to be useful up to about 40-45A. However, past that it takes too long (more than half a second) to prevent the excessive current from damaging something.
A +12V rail of 40A equals a wattage of 480W; which is a +12V capacity typical of a decent 550W power supply. So on power supplies up to about 500-600W single rail is safe, because the +12V OCP is fast enough to be useful (assuming it HAS +12V OCP).
However, for higher wattages the OCP will be too slow to protect anything. And also at higher wattages the amount of current the PSU can provide before the OPP (over power protection) cuts in is much higher as well.
If the Ultra X4 1600W had been a multi-rail power supply then this component failure wouldn't have been nearly as severe. The mosfet would have died and the mobo would be ruined, but you wouldn't see more than a brief spark before the PSU shut down. No fire.
It wouldn't have been too difficult to add proper OCP to the Ultra PSU. Say four 32A rails, each with two or three connectors on it. The PSU would have been able to run a top tier system with ease, and still have useful over current protection. And it would have cost no more than $1-$2 to add on a PSU of this wattage.
But instead Ultra decided to remove this vital protection, pocket the savings, and market it as a "feature".
But this isn't unique to Ultra. Many brands remove +12V OCP and advertise it as a feature, many of them well known and respected. Such a PSU will still usually advertise that it has OCP--and it does. It's just on the +5V and +3.3V (and sometimes +5VSB and -12V) rails, and not the +12V. It's a widespread practice, and the average enthusiast, even those who are otherwise very technically knowledgeable, may not understand what single rail really means.
Thanks to these guys:
PC Power & Cooling never designed or engineered or built a power supply, see, despite their best efforts to convince everyone to the contrary. They just rebranded from other companies (Sparkle Power Inc, Win-Tact, SeaSonic). When the recommendation for multi rail OCP was first added to the ATX12V specification, PC P&C tried to retrofit it into their existing product lines. But gosh darnit, they just couldn't get it working right. So rather than hire some competent engineers they said, 'Screw the ATX12V spec, let's just ignore that bit and call it a feature!'
And so the "single rail" myth was born, and everyone ate it up. It sounds good: "One STRONG POWERFUL MANLY rail" is obviously FAR better than "multiple weak wimpy rails". And since PC P&C was so successful with it, everyone else copied them. Usually by taking a PSU that already had multi-rail OCP and just removing that protection feature. That way they saved a few pennies per PSU, and got to market their PSU as "single rail" and instantly get five times the sales figures.
But single rail is NOT a good thing, especially not on PSUs over ~500-600W. It's dangerous, because if one of your components fails and has a short circuit, your power supply won't shut down to protect the system. It'll just keep feeding current until the whole thing goes up in flames.
So don't fall for the marketing. Learn from SVT's misfortune. Demand properly implemented OCP on every power supply you buy, and show this article to anyone who tries to claim that single rail power supplies are obviously better.
Addendum: Just because your PSU is single rail, doesn't mean that it's a bad power supply or that it's going to spontaneously combust. It just means that it's lacking a protection set (or that set is poorly implemented). Multi-rail OCP will save your butt in a couple of 1/10,000 occurrences. The vast majority of people will never be in a situation where they'll really need OCP. But those who do get in that situation, really need it.
The point of this is not to make you immediately abandon your single rail PSUs. You're in all likelihood fine. The point is to get the lack of a feature to stop being considered a benefit.