Many people and possibly some RV manufacturers install a household type light switch (known as a "snap switch" on the inside so that you leave the switch on the water heater on, and then switch it on and off with the switch inside. This is for the 120v AC heating element.
Some installations may, as noted above, use a 12v DC controlled relay to switch the 120v AC.
Clearly something is building up a lot of resistance in the circuit and causing the overheating of the wire, etc. Personally, I would replace every bit of the wire (electrical Non Metallic Cable, aka "Romex™") from the distribution panel to the water heater, any 120v AC swtiches on the inside with top quality 20 amp "motor rated' switches (they have much heavier contacts than ordinary switches) and also the switch installed in the water heater and the element.
This may sound radical, but is a fairly inexpensive proposition so far as parts go, and any good electrical savvy person could handle this easily.
Charles
'03 Ram 2500 CTD, 5.9HO six speed, PacBrake Exh Brake, std cab, long bed, Leer top and 2008 Bigfoot 25B21RB.. previously (both gone) 2008 Thor/Dutchman Freedom Spirit 180 & 2007 Winnebago View 23H Motorhome.