ALL consumer NiMH cells/batteries are sealed.
The chemical reaction inside the battery produces free Hydrogen when charged or discharged. In normal use this is absorbed and re-combined inside the battery; thus, the electrolyte is not lost. This electrolyte balance is critical for the cell's capacity and proper operation.
These "sealed" cells have an overpressure valve in them. In the event of gross overcharge or overdischarge (e.g. a short circuit inside the light) these overpressure valves can release as the gas is produced faster than the internal catalytic reaction can recombine it. Once they do the cell in question is destroyed, as the electrolyte balance is altered, the seal never completely and properly closes, and you need to replace that cell.
The bottom line is that in normal use there is no issue. If your dive light suffers a short internally underwater there is a non-zero risk of a hydrogen release. This is usually handled by a hydrogen catalyst in the battery compartment somewhere that is designed to be consumed as it absorbs the H2.
If that catalyst is overwhelmed by a catastrophic failure (or you simply don't replace it after a problem and its no longer there) it is POSSIBLE to get enough H2 in the battery compartment where it could ignite. This would be bad, but it is a very low risk, and that same risk exists for ANY of the common chemical cell (e.g. "battery") chemistries in use today (alkaline, NiCad, NiMH, Li-Ion, etc)
PADI is blowing smoke on this one (what else is new).
NiMH cells are nice because:
1. They have a flatter discharge curve than some other technologies; similar to NiCad cells (that is, the cell voltage is flat from full charge to nearly-full-discharge)
2. They tend to have an extremely high energy density (amp-hour rating) compared to other technologies.
3. They are not subject to the "memory effect."
4. They have EXTREMELY low internal resistance. This allows extremely large amounts of current to be demanded of them when required for short periods of time, which makes them excellent for use in things like cameras, strobes, etc.
They do, however, have some disadvantages:
1. Their internal self-discharge rate is relatively high. If you leave them unused but charged for a month, a third to half of their capacity may be gone! Thus you do need to pay attention to them; they are a poor choice for "standby" use where they are stuck in a drawer or piece of equipment and then called on at some future date.
2. Their internal resistance, being very low, makes them potentially dangerous if short-circuited. The extreme current levels they can produce means that they are quite capable of getting dangerously hot if shorted, and can "vent", releasing electrolyte and gas in that condition.
3. If discharged all the way flat to the point that a reverse-charge potential is impressed on them they are usually irrevocably damaged. It is therefore important not to allow that to happen and to turn off any equipment IMMEDIATELY at the first sign of voltage droop (e.g. dimming of a light, etc)
4. They tend to be expensive.
