The general problem with lithium batteries is that they pack a substantial amount of energy. A short in a fully charged lithium battery can easily heat it by 200 degrees Celsius. If there's another lithium battery nearby, this heat can short it and cause it to release its own energy, etc. in a chain reaction. That's why we have specific packing requirements for the transport of lithium batteries. We need the packaging to contain and isolate any individual short that occurs.
And the most important point about Lithium Ion batteries and Cargo compartments in aircraft. Their fire suppression systems are next to useless against these types of fires. That's why IATA gave them a drill code of 9FZ previously 9FL.
The "Z" code states that 'Fire
may not be be extinguished by cargo fire suppression systems'