From Wikipedia:
Nitrous oxide can also be used in a monopropellant rocket. In the presence of a heated catalyst, N2O will decompose exothermically into nitrogen and oxygen, at a temperature of approximately 1300 °C.
They were doing a "cold test", and I saw statements that it had been done many times and was supposed to be safe. It does seem to be a bit of a mystery, from the bare outline of the facts involved.
Some subcontractor who made the tank (pressure-vessel) is probably sweating bullets. Almost certainly the tank was properly engineered and designed.
Most likely there was either an error or flaw in fabrication - a bad weldment for example which ND inspection didn't catch - or a flaw in the material from which the tank was fabricated, which was likewise not caught by incoming inspection.
What's the heated catalyst?