What happens is that the unit gets hot enough to loosen the thermal paste (solder) that holds the
RSX graphics chip in place. The heat, as far as I know, is not hot enough to damage anything else, so it's not an overheating issue.
http://www.beetronix.com.au/gaming-c.../ps3-ylod.html
One small tip is to not stand your PS3 up on its side. If you have it on its side, the solder, if overheated, will cause the RSX chip to move. I'm not positive, but I think that using a PS3 cooling fan would almost have to help. Also, placing it in a well ventilated area would probably help.
I don't think that is the reason. From what I have read, people have had this happen to their PS3s after only having them on for a short amount of time. When it happened to mine, I was watching a Blu-ray. I'm pretty sure that I had only had it on for about an hour and a half. It could have been longer, though.
From what I was told about this issue, from someone who specializes in fixing this problem, it will happen to every launch model. From what I have read, in recent models, the RSX chip is no longer attached the way that it was in the launch models, so it is no longer a problem.
Even though Sony knows that this is their fault, they still charge a $150 dollar repair fee for models that are no longer under warranty.