Consider this: If only about 30 per cent of the energy in your vehicle's gasoline goes into making horsepower (and it does), then the engine produces more than twice as much thermal energy than it does motive force. That kind of thermal energy trapped in something as small as an engine block is easily capable of sending it into a China Syndrome-spec meltdown.
Mild Overheating -- Top of the Temperature Gauge
Once the temperature gauge needle reaches the top of the gauge, the thermostat is open, the fans are on and the cooling system is working its hardest to shed engine heat. Short excursions to the top of the gauge won't hurt anything, but sustained high temperatures will saturate the engine with heat and can lead to a runaway thermal build-up once the cooling system loses control. At this stage, you may notice a drop in power, as the intake charge heats up and the air loses density; possible knock or ping under acceleration.
Overheating -- 20 to 40 Degrees Over
Depending on the engine design and the amount of carbon build-up in the cylinders, your vehicle may begin to experience engine knock (detonation). If you continue to run the engine under high temperatures and detonation, it's only a matter of time before one or more of the pistons crack, the piston rings shatter or the spark plug electrode straps melt. At this point, the oil has thinned to the consistency of water, which means accelerated bearing, cylinder bore and valvetrain wear. Depending on the condition and type of engine, you may experience a blowout in the water pump or intake manifold gaskets.
Severe Overheating -- 4.44 to 26.6 degrees C Over
By now, you've definitely noticed a drop in power, and the oil has thinned to the point that the engine sounds like a coffee can full of ball bearings. There's almost certain damage to the bearings and wear surfaces inside the engine, as well as the top piston rings. This is head-gasket-blowing territory, especially if your vehicle's engine has aluminium heads. Sustained at this level, the loss of oil viscosity will eat the bearings and cause the engine to seize, and the heat will cause the heads to warp and probably crack.
Total Meltdown -- 37.8 degrees C Plus
The engine block, crankshaft, rods, intake and exhaust manifolds, fuel and ignition system, valvesprings, timing chain and accessory drives might be salvageable, but that's about it. Everything else is either so scored by lack of lubrication, warped by heat or damaged at a molecular level that the engine will never be the same again. Even after machining, cylinder heads that have been run at this temperature for any amount of time are probably damaged beyond repair. There's a fair chance that once the bearings go, the crankshaft will seize up in the block, break the main caps or block webbing and drill itself into the Earth.
Managing the Aftermath
An oil additive with PTFE (Teflon) will form a protective barrier over bearing surfaces and cylinder walls, which can give you some margin of error where overheating is concerned. Never introduce cold water to a hot engine. Don't spray the engine with a hose, don't add coolant if you've lost all of it -- don't even spit on the thing. Metal heats as it expands, and cooling any one area very rapidly will cause the cooled area to contract and pull away from still-hot metal. The end result is a cracked block or cylinder heads. Just shut the engine down and allow it to cool on its own, since the damage has already been done. You might want to consider giving the starter a bump every 30 seconds to reduce the possibility of engine seizure while the metal cools and contracts.