Hot Water Tank - is this a bleed valve or a vent?

Joined
20 Apr 2013
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Location
Essex
Country
United Kingdom
Came downstairs this morning to a pool of water and a dripping ceiling.
The cause of this appears to have been the item circled in red in the picture below.
It was undone - i.e. I could screw it down with very little effort using my fingertips.

The tank has probably been in place for 5 years - without any issues. I'm guessing that this fitting wasn't screwed down that hard and the family pulling towels etc past it has managed to loosen it off.

As an immediate fix I have tightened it down but this may be masking off another issue...
1. What purpose does it serve?
2. How tight should it be done up?
3. The fact that it started spewing out water - does this imply there are problems elsewhere?

FYI I got up at around 6.20 a.m. had a shower, the central heating would have powered up at around the same time - went downstairs to find the water about 10 minutes later. Everything had been dry at 11 pm.
Relief Valve.JPG
 
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