Keep in mind that truncation of the transaction log is never done past the oldest transaction in the database. So if there was an open transaction in tempdb since two weeks the log will just keep growing.
The tempdb log was allowed to grow without bounds, which I think is a bad idea. What happened was that the log file took up all disk space, crashing the server (the os, not sql server). I would prefer the sql server stopping because the tempdb log is full, while the disk still has space left and the os is still running.
That's indeed the expected behaviour. I can't say why the server crashed, but if SQL Server asks the OS "Can I enlarge this file with 1GB?" and the OS responds "Sure, go ahead", but there is only 500 MB left, I guess the outcome can be bad. This sounds like an OS problem to. Or a problem with the VM platform, where the VM admins may have overallocated the disk spaces for the VMs.