the pump is pumping hot wtaer from the hot water tank around the domestic hot water system, i.e to taps and shower.
Depends on the type of pump, but for your garden variety type pump, there is a impeller of some sort that is turned by the motor to pump the water. The actual shaft of the motor is not in contact with the water (except where the impeller is attached to the shaft). A common type of failure mode here is when the seals on the shaft (which keep the water contained to the impeller area) have failed and water has gotten past the shaft seal and degraded the bearings holding the shaft = seizing up.
These pumps can have their own bearing or they may rely on the bearings in the motor. Most of these are anti-friction bearings that have a limited life. Also if the pump runs dry it can over heat and seize.
