Heat in all internal combustion, piston-type engines (which all VW vans have) is generated in the combustion chamber. This is the space between the top of the pistons and cylinder head. In fact, over 95% of all heat comes from the combustion chamber—all other sources (friction, pumping losses, etc.) account for less than 5%. When a water-cooled engine overheats, its coolant boils and escapes first past the coolant pressure cap, then past any other gasket or seal it can get past if/as the overheating is allowed to continue. The damage starts up at the piston/cylinder area and can expand to other areas of the engine if the overheating is allowed to continue.
Here are various degrees of overheating:
Stage 1 Overheating: Coolant boils over past the coolant bottle cap and is noticed within about 5-10 seconds of occurrence. The surface temperature of cylinder head(s) will get over 225 degrees F. In this scenario there will may be no engine damage at all. Find the problem (clogged radiator, blown hose, thrown V-belt, whatever), fix it, and you are on your way in an hour/few hundred bucks.
Stage 2 Overheating: Coolant boils past the coolant cap and isn't noticed for around 10-20 seconds. Cylinder head surface temperature will get over 250 degrees F. In this scenario there may only be damage to the water jacket seals and/or head gaskets. You might get away with just removal and installation of the head(s), replacement of the gaskets and you're on your way. Cost could be hundreds to low thousands of dollars.
Stage 3 Overheating: Coolant is all gone and the engine continues to be operated more than 30 seconds. Cylinder head and piston temperatures soar past 400 degrees. The aluminum pistons expand faster and outgrow the steel cylinders. The aluminum piston material is literally smeared onto the walls of the cylinder. Chunks of piston might come off and end up in the lower end (crankshaft) area of the engine. In this scenario you are looking at replacing all pistons and either honing or replacing the cylinders. If a lot of debris got down past the pistons and into the crankcase, you will have to take the whole engine apart just to properly clean it or risk the debris causing more problems down the road. Cost to repair will be in the 40-80% cost of a completely fresh engine.
Stage 4 Overheating: The engine is operated until one or more of the pistons completely seizes in the cylinder, and one or more of the connecting rods snaps off and is driven though the side of engine block by the (still rotating) crankshaft. This situation is typically synonymous with: Vacation over; engine is a total loss.