Are those LEDs mounted directly on wood? If so, it can't get any more wrong than that. LEDs need to be mounted to some sort of heatsink to dissipate the heat produced at the base of the LED which would otherwise kill the LED. No clue if that's the cause of the explosion, but I've never seen LEDs mounted to wood like that.
In the picture they are on my carpet (after I removed them) I had them suspended by their side to the end of the canopy, so I think it was moisture build up. But as these are for under cabinets, they would be mounted to the wooden bottom via their plastic clips, which would leave a small air space.