The fault detection is meant to monitor the supply voltages, temperature, and input pins, but not every pin is monitored.
An alarm gets triggered if VDD24 falls below 15V, which would indicate that has a low-impedance path to ground.
An alert is triggered if any of the inputs go beyond an upper or lower voltage limit set by resistors. These are meant to detect broken wires and shorts to GND, but two inputs shorted together might not trip these alarms.
Those cover the most likely faults, since they would happen off-board. Any shorts between traces on the PCB are not covered by the diagnostics, since faults inside an enclosure should be less likely.