Why do Li-ion batteries explode?

Run of the mill ohmic (resistive) heating.

When you have a lot of current flowing through a very thin conductor, that causes the conductor to heat up to huge degree, usually just burning it out and breaking the circuit, ending the heating.

When Lithium-Ion batteries are over-charged, thin, whispy filaments of lithium metal start to grow inward from the electrodes through the solid electrolyte. These filaments are called dendrites. As a battery with dendrites is discharged, the dendrites can slowly erode away, but when over-charged again, they grow bigger even faster. Eventually, two dendrites get very close to one another from opposite electrodes. When they get close enough, they will essentially form a tiny, scale model of lightning, but in solid electrolyte, not gaseous atmosphere.

Once the circuit is complete, all of the charge that the battery has stored up is going to want to gush through that tiny dendritic circuit path. And being that dendrites usually grow together when a battery is being over-charged, that tends to be a lot of stored charge. Once it starts, because a battery pack is so small and the energy density of Li-Ion so high (though no where near as high as in a gallon of gasoline, sorry electric vehicle fanboys), once the dendrites start the process with ignition, it’s all over but the home owner’s insurance claim forms.

The closer the two electrodes are, the easier it is for the dendrites to bridge across them and cause the battery pack to ignite. The battery packs in cell phones and tablets are very thin. If manufacturers are not careful in their manufacturing methods and quality control testing, they can wind up accidentally producing entire product lines that are essentially pocket bombs.