No, this isn't how electricity works!
The location of the melting / burning clearly shows that this was due to bad contact between the plug pin and socket contact, and unlikely to have been due to loose terminals. Granted the line terminal was apparently loose because the cable pulled out, and a loose terminal can cause a burnout, but in this case it was unrelated.
All contacts rely on tiny (almost invisible) areas of metal actually making contact, so the current density is high and at least some heat is dissipated in the resistance. Less effective contact leads to more heat, which accelerates oxidation of the surface and weakens the spring temper of the socket contact gripping the pin. . This further reduces the contact area and it goes into runaway, leading to a burnout.
Good quality contacts are less likely to suffer from this effect and the socket is the main player rather than the plug. But progressive failure can still be triggered by some random adverse situation like a layer of deposit on the plug pin before installation, and some combinations of plug and socket metal alloys make better contact together than others.
Plugs that are regularly moved have the advantage that any oxide buildup is mechanically scraped off so that fresh bare metal surfaces are exposed. The same is true of the socket contact although heavy use eventually wears out the contact. Again, quality counts and the devil is in the detail, although price is a guide there is no cast-iron guarantee that the most expensive socket will last the longest in a particular application.
