Transformer "explosions" don't last very long. Transformer fires are a different color. [0] As others have noted, the color suggests arcing. Arcing has a number of different causes, but should be brief -- system protection in the form of circuit breakers should interrupt the flow of power immediately ending the arc.
Yes, for a large power transformer the protection scheme should have been able to detect an arcing fault and clear it rapidly. This leaves me to wonder if there was a protection misoperation that occurred in tandem with the fault. If the fault is external to the tank (for instance arcing at the termination of one of the bushings), it may not be in the differential zone of protection, but the overall protection scheme should provide for fast clearing of close-in external faults for the reasons well demonstrated by this incident.
In an arc welder, arcing is the intended mode of operation and any protective devices are set accordingly.
In the protection schemes used on the bulk electrical system, we have very sensitive relaying that can pick up on faults of even milli-amps (remember at high voltage even a small amount of current can dissipate a lot of energy) to detect, for instance, high impedance ground faults or turn-to-turn faults inside a transformer.
The function of the actual circuit breaker - to interrupt current - is not different, although the mechanical construction changes quite a bit when you need to interrupt both very high currents and extinguish the high-voltage arc created when you interrupt the circuit. Inert gas (e.g. SF6) or vacuum are used as dielectric mediums due to the high voltage.
What is different is how the breakers are controlled - rather than being its own stand-alone overcurrent protection device as in a home electrical panel, it's just a dumb device controlled by one or more multifunction microprocessor relays that are designed to detect a variety of power system fault conditions and clear them rapidly to avoid damage to expensive equipment.
High voltage circuit breakers are actually very interesting, videos are on youtube. Some common ones are isolatef with SF6, and as long as there is fluor, it’s nasty.
This article is more factual, characterizing it as a electrical fault creating an arc: https://abc7ny.com/electrical-arc-turns-night-sky-blue-in-ny...
It is curious that 1) it happened at all, and 2) system protection didn't immediately isolate the circuit.
[0] https://www.youtube.com/watch?v=YZipeaAkuC0