When a CDI goes bad it is often due to mechanical failure triggering an electrical failure. Sometimes water gets into the electronics somewhere (even on models that are "potted" with ceramic or silicone) and either corrodes or shorts the electronics. One way that this can happen over time is if there is a spot on the wire harness that is frequently exposed to snow melt. Over time the copper wire actually wicks moisture through it by capillary action, until the moisture gets pulled all the way into the electronics. If you have ever cut open a wire harness and seen a copper wire that looks black in color for several feet or more, this is usually the result of moisture being pulled down the wire by capillary action. Some of the earlier T660 Arctic Cats failed cdis in exactly this way. There was a wire splice that had electrical tape over it but was not truly sealed. It would take a few months, but enough moisture would finally wick down the wire until it became a small almost-fountain inside the CDI. When you opened a failed CDI from this model it would have a lot of mineral residue spreading in a circle out from one particular pin.
Do visual inspections on wire harnesses whenever you get a chance to look for wear and water ingestion.
Other possible causes include a voltage spike finding it's way into the wire harness and following it into the CDI. This is sometimes caused when a spot in the wire harness that is laying against a sharp edge finally wears through and 2 wire short to each other, or the wire shorts to the frame.
As far as what occurs internally, most of the signals that a CDI uses are very low current and low voltage. Once the resistance of any part of the circuit changes due to corrosion or a short-circuit, the signals become unreadable.
