This is what we know: Fukushima is a Boiling Water Reactor or BWR shown in schematic above. Just as as an automobile engine needs flowing coolant to keep from overheating, the reactor vessel will overheat if deprived of flowing water. Unlike your car engine, BWR's take a day or two to safely wind down in the event of an emergency.
This was not a nuclear explosion. Meaning a small scale mushroom cloud. I'm assured by experts that can't happen with this type of fuel. The power of the explosion was probably more like a conventional bomb or natural gas storage accident.
The danger to the larger local community is fallout from venting, or material from melting fuel rods lost in an explosion. Hence the evacuation. But so far, radiation reportedly detected outside the plant has been minimal.
What we don't know: Exactly what caused the explosion. The scope of damage done to the circulation system during the quake and in the unit that exploded, and how that damage might be affecting efforts to shut the reactors down.