The gasket between the engine block and cylinder head is often referred to as a “head gasket.” In the case of the water-boxer engine, the sealing between the engine block and cylinder head is actually a combination of a metal gasket (sometimes called a “fire ring”) that fits right on top of the cylinder and a “water jacket seal” that is actually more a part of the cooling system than the engine itself. For details on the design, please read this article: http://www.gowesty.com/tech-article-details.php?id=39
When a water-boxer is overheated, as with any engine, one or both of these gaskets can be compromised. Oftentimes, it is just the metal gasket that fails, which allows the combustion gases that are normally contained within the cylinder and combustion chamber to escape into the cooling system. Even tiny amounts of combustion gases will accumulate in the cooling system over time, and cause all sorts of mysterious cooling (or lack thereof) problems without any visible, external coolant leaks. If an engine is severely overheated, the outer water jacket seal can fail, allowing coolant to actually leak. But make no mistake: The damaged head gasket parts is the egg, not the chicken.
In other words, failed head gasket parts are a result of overheating, not the other way around. This can be counterintuitive, because, as we all know, it is the engine that is creating the heat. But that is what engines do: create heat and pressure. It is the job of the gaskets to contain the heat and pressure. If the engine experiences a lack of cooling (failure of a cooling system component), the heat and pressure build to a level where the head gasket parts can no longer do their job and they “blow”—thus the term “blown head gasket.”
Think of it this way: If it were raining outside and you looked up at your ceiling to see the paint bubbling and water dripping in, would you call the guy that painted the ceiling or the guy that put on the roof? Water gushing out of your water jacket seal is like the paint on the ceiling, and the drywall ceiling is the fire ring—and the roofing material (or lack thereof) is the overheating episode that caused the problem in the first place!