Circuit breaker did not trip why?

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Great question.

It seems to me that if a AFCI is watching for a specific current signature it would sense that on either side of the breaker,

In this scenario we would be talking a series arc. If the downstream load current was high enough I agree it probably would not matter which side the arc occurred on.

One big difference however is that with a downstream arc the breaker will still be powered with "near full line voltage" during the event.
When an upstream arc occurs the breaker will be experiencing an intermittent loss of line voltage while attempting to monitor the current signature.

Perhaps the manufacturers have addressed this with enough internal capacitance that will smoothly power the electronics and thus allow it to ride-out the line voltage interruptions.

I am still unclear as to whether they are designed to, or intended to, catch upstream arcs without a direct advertisement saying that they are.
 
I this instance the only thing that may have caused a beaker, any breaker close to the heating, to trip is the heat itself. The surounding heat may cause the bimetalic overload (thermal) element in the breaker to berate and trip the breaker.
 
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