On our last two RVs with a DSI enabled hot water heater, the DSI fault light indicates the hot water heater was not able to light after 3 tries. Turn the hot water heater off and then back on again. It will try to light 3 more times. If it lights the fault light stays off and the hot water heater will run off LP Gas, if it doesn't light it will light the fault light. It may take a few tries when first lighting the hot water heater since there may not be any propane in the line. You want to keep an eye on the light, because it may fail to light the next time it tries to light (after hot water has been used or the tank loses heat). If it is windy out, it is very possible it may not light when it tries to fire the next time.
Both DSI enabled hot water heaters we have had also have the ability to run on Electric. In both cases (both RVs were Jaycos, other Manufacturers may vary) the electric switch and the LP gas switch were right next to each other with the DSI fault light between the two switches. It seems pointless to separate the two switches, but you never know.
-Michael