Temperature and pressure valves (or 'T&P valves') and discharge pipes are regulated, as both are critical to the successful running of a storage tank hot water system. You should never attempt to repair this valve by yourself - always call a licensed plumber.
T&P valves prevent excess heat and pressure from building up in your system by leaking out water when the temperature or pressure in the tank is too high. The T&P valve should not do this if your tank is set up and working properly, though. It is recommended that the valve be flushed once a year to prevent any mineral build up, and to ensure it is operating correctly.
The T&P valve is connected to a discharge pipe which should lead out to some sort of overflow drain.
It is possible that it will drain out onto the open ground, but the outlet will be very close to the ground to prevent splashback. The water that comes out of this pipe and indeed the pipe itself is very hot, and should not be touched without hand protection.
Condition and operation of T&P valves
Each state has its own version of the plumbing code, a piece of legislation that dictates what requirements are needed to be met to comply with state standards. Check with your local plumber or the manufacturer of your system if you have any concerns about the condition or operation of your T&P valve.