Update:
Performing the static fire with the payload attached allows the launch to proceed roughly a day earlier than if the static fire is performed with only the rocket, and the payload attached afterwards. Again, it is up to the customer to decide whether they want this or not; in this case Spacecom (the owners of the lost Amos-6 satellite) chose to expedite the launch.
The explosion appears to have originated in the liquid oxygen (LOX) tank of Falcon 9 and is confirmed to have occurred before engine ignition. As such it means that no rocket launch took place, therefore the launch insurance will not pay out for the loss. This is almost certainly a fatal blow to Israel-based Spacecom, whose deal to sell themselves to a Chinese conglomerate was contingent on the successful orbiting of Amos-6. Not only are they out $200 million, their buyer will likely break off the purchase. Unsurprisingly, Spacecom's shares were down over 9% on the Tel Aviv stock exchange after the incident.
If the previous failure of a Falcon 9 is anything to go by, SpaceX won't be performing any launches for at least 6 months while they investigate and fix; Amos-6 was already late, NASA had an ISS cargo delivery planned on a SpaceX Dragon, and Iridium was planning 2 launches of 10 satellites to shore up holes in its 1990s-era network. While these and other SpaceX customers obviously have backup plans with other operators, it's certain that launch capacity will be in short supply and therefore prices will increase accordingly.
Right now it seems that Pad 40 at Vandenberg AFB was destroyed by the explosion - since this is (was) the only facility designed to handle the SpaceX Dragon capsule, all missions involving this capsule (including the aforementioned ISS resupply and SpaceX's planned crew transportation tests) will be a no-go until a replacement facility is constructed.
All in all, not a great day for human spaceflight. But thankfully nobody was killed or injured.
