From what I've inferred from reading, they were flight testing a new engine, or at least a new fuel in the engine. I think SS1 was powered by a kind of rubber propellant, what the interim fuel was for SS2 up to this point, I cannot say. This new propellant, however, was a sort of plasic pellet - I'm guessing it might look a bit like ball powder for those familiar with ammunition? Regardless, new fuels + high temperatures + emergent technology = teething problems. Sadly, it happens, but that's what the development cycle is for. In the case of Antares, even mature technology can fail catastrophically in the case of the Russian engine. Finally, lest ye forget, this is not the first explostion Scaled has had, and it certainly won't be the last.
...Of course, that's rocket science for you. The worst part about this story are many of the comments on mainstream sites from people who just do not understand this, or else think it a waste. Many of their comments might be arguable if this was a government project, but that is not the case here. Otherwise they cannot understand that actual applied science does in fact end up being a hands-on affair, and if you're at the bleeding edge, you very well may be hurt - it's called the bleeding edge for a reason. But I digress - scientists will understand, grieve a bit, and carry on; you cannot help those without vision, however.
