[snip]
Lots of stuff can go wrong. It's a brutal environment.
Ozone can carbonize dirty surfaces near the HV and create a conductive path into sensitive circuits. The coil's winding insulation can fail and overheat the coil. Excessive voltages caused by cracked wires, worn points, or a failed capacitor results avalanching in the power transistor, the semiconductor equivalent of an arc-over, and accelerated aging of the coil insulation. Avalanching slowly degrades the silicon crystal into a more passive form, like a resistor, that will overheat.
Transistors usually fail as a short circuit or a low resistance. If the fried transistor heats enough to melt a lead wire, the flyback power released from the coil can lead to a small explosion at the break.
Typical ignition systems are flyback types. Inductors act as constant current devices. Applying 12V causes current flow to gradually increase. Break the current rapidly and voltage shoots in the opposite direction in an attempt to maintain the current flow. That's a few hundred volts on the primary and tens of thousands on the secondary. Flyback transformers have a problem with imperfect magnetic coupling between the two coils. Some of the power spikes back into the primary even if the secondary discharges into a spark plug. It's the capacitor's job to dampen the primary's voltage so it doesn't arc over the switch/transistor or rise faster than the switch/transistor can turn off. If the secondary doesn't discharge into a spark plug, the flyback voltage will rise until something gives way. Hopefully its a protective avalanche diode or spark gap.