How did this happen?

Massive short?

Other plausible alternative is that there was a high resistance connection at each of those hollow terminals. Pulling high starting current across a high resistance connection will create a lot of heat that could have melted those hollow terminals.

Power (i.e. heat) is P=I^2 * R = current (squared) x resistance

So pulling something on the order of 100 amps to start across a seemingly small 2 ohm resistance ; Power (watts) = 100*100 * 2 = 20,000 Watts.

nasty thing to happen in a boat this sort of thing causes many to burn up .

I’m with Hawk on this one regarding high resistance in connection. The ends of heavy cables on boats tend to get internal corrosion in the copper wires. When this happens they have very high resistance.

Cut the ends off of you cables. I bet that the copper wires are are all corroded/oxidized black. When this happens they will carry little current.

Year, make model?
You might only need power to the coil and fuel pump to get it running.
Once running, start connecting the remaining circuits one at a time till you see a spark.
The spark indicates a draw, too big of a draw, or a short.
If boat has AC shore power, the inverter would be the first suspect.

As you do this, learn how to Hotwire the boat, on the water, bare minimum required to get back to shore…

It does look like very high resistance

Or a heavy load maybe. Did you add lights for fishing? Or added anything like a big entertainment system? Otherwise, the others are probably right about the cables.

My guess would be poor connections that led to some arcing. Hope you get to the bottom of it, this is not pretty and it's a good thing you caught it when you did instead of the middle of the lake with a fire

Thanks to all..... This was a friend's boat. The mechanic thought maybe the starter caused it. He got some automotive type connectors added to the wires. The nite we went out the lake was "angry". Crazy waves in Nashville. all the bouncing and wing nut connectors...

I thought maybe the wing nut ones were loose. Maybe a combo of starter and loose connections.

Daaamn! Imma buy my next battery from the other company that still makes them.

I have 2 boat batteries in my garage that look just like that. My guess is that there is a short somewhere, I am just not sure how to locate it.

Being extra safe on the water cannot be stressed too much.

Guys/gals, please be careful and limit the amount of firewater brought aboard

Every year we lose too many souls to the lakes/oceans/.... try your best to not be one