Hydrogen is generated when a battery is overcharged. A discharged battery has both sets of plates covered with lead sulfate. While charging, the electric current reduces the lead sulfate on the negative plates to pure lead and sulfuric acid and at the same time oxidizes the lead sulfate on the positive plates to lead dioxide and sulfuric acid. The acid concentration of the electrolyte increases as the battery charges and that’s why measuring the specific gravity of the electrolyte is a good way of checking the battery’s state of charge.
Once the lead sulfate has all been converted into lead dioxide and pure lead, there is nothing for the current to do but convert the water into hydrogen gas and oxygen gas. The negative plates release hydrogen gas and the positive plates release oxygen gas in a perfectly stoichiometric ratio which fills the air space in the battery.
If your battery is constantly losing electrolyte, check the car’s voltage regulator, it may be chronically overcharging your battery.
A battery with a dead cell will also cause the charging system to overcharge the cells that are not dead leading to an explosive concentration of hydrogen and pure oxygen.
To understand just how explosive a stoichiometric mixture of hydrogen and oxygen is, take an oxy-acetylene torch and adjust it to a perfect flame, then blow that flame out without changing the mixture adjustments, then poke a hole in the bottom of a large styrofoam cup placed upside down on concrete and fill that cup with oxygen and acetylene, then light the torch and swipe the flame over the hole in the bottom of the cup. Be sure to wear earplugs! Also warn other people that you are going to do that because the people in the office and the business next door are going to come out to see what the heck happened.