Sounds like a Suburban water heater
The switch with the red light and reset is the gas switch....When on, the gas should light....if you have gas flow.
The switch outside is to turn on the electric side...my water heater has another switch for the electric side inside the trailer.
I am thinking that since you had both switches on, both electric and gas sides should have been heating. Maybe your gas wasnt turned on or the gas flow is blocked for some reason. The electric side should still have worked if it was getting power and the heater element is working.