Edit: More elaboration and discussion in the other thread here:
https://www.eevblog.com/forum/renewable-energy/australias-biggest-tesla-battery-storage-system-at-moorabool-is-on-fire/The suggestion of full on building brick walls between packs seems a bit excessive to me. From the photos shown the fire is only present in one bank. We'll see tomorrow morning if it spread.
The thing with many small cells being more likely to fail is intuitive but incorrect. The total capacity is of course dependent on electrode mass/area. If that capacity is achieved using many small units or fewer large units, the electrode area and chance of random manufacturing faults in the jelly roll is ~equal. By having the capacity split into small units however, failures can be better isolated and rejected in the manufacturing QC and also implementation isolating failures to single smaller cells.
Also as far as a single cell fault setting off a whole pack. IEC 62619 and UL 1973 as well as other standards for battery safety which is could fall under have "propagation testing" aka "Single Cell Failure Tolerance" if one cell blows up then the rest of the pack needs to remain safe. Reason being if there does happen to be a cell with a manufacturing fault or other random fault sneak in, it can't set the whole pack off.
From the above two you can hopefully see how small cell designs are generally considered safer.
As for what happened here, the Tesla battery pack designs are liquid cooled which should make them incredible tolerant to fire, as long as coolant is present (not even pumped, just sitting in and filling the coolant lines). Given this occurred during construction, my guess is that during commissioning there was some fault with coolant not being in the system whether that be insufficient or not at all filling the coolant or a coolant leak then during a commissioning load testing the pack with faulty coolant fill could have overheated and caught fire. The propagation testing only guard against limited individual cell failure, not a whole pack overheating.
Regardless, something went very wrong with the system/installation process.
Edit from the other thread:
Edit: Tesla Megapack (summary) datasheet: https://impulsora.com/wp-content/uploads/2020/09/Ficha-Tecnica-Mega-Pack.pdf
Edit 2: "All Tesla products undergo rigorous testing to standards such as UL 1973 and IEC 62619 that ensure the battery modules are resistant to single cell thermal runaway propagation."
https://www.greenburghny.com/DocumentCenter/View/7245/PB-20-18-Eagle-Energy---Tesla-Safety-Data-Sheet