Atwood water heater ignition acting strange...

The 12 volt power goes from the switch through a flame fuse, thermostat, then to the ignition module. Any of these can interrupt the power- a meter or test light will tell you where the power stops.
Those flame fuses are flaky, but all of them, including just a bit of corrosion on the board connector, can give that failure- power not getting to the board, since you get no fault light.