If Bob has ten wounds and has taken 10 damage, but no other damage, he's still operating at normal capacity:
As long as a character’s total damage is equal to or less than his wounds, his body still functions normally
However, any further damage he takes will be Critical damage:
If a character’s damage ever exceeds his wounds, he begins to take Critical damage.
The intention is that the points of damage above and beyond the character's total wounds are Critical damage, so if Bob was totally healthy and took 12 points of damage in one hit, that becomes 10 damage and 2 Critical damage, and he'd suffer the 2-Critical-damage-effect for whatever location he was hit in.
Like normal damage, Critical damage is cumulative, so if Bob keeps taking damage he will suffer horrible consequences:
If a Critically damaged character suffers more damage, the amount is added to his existing Critical damage and a new set of Critical Effects are applied based on his total Critical damage (assuming he is still alive).
The effect suffered is determined by the accumulated total of Critical damage, not just the amount done by the triggering hit. All the Critical Effect tables do include a bunch of "target automatically dies" results at the high end so there's no way Bob can keep taking damage indefinitely - he will be killed if he keeps being damaged. Critical damage isn't tracked by location, either, it's just a single total.
Hit locations are for determining how well armoured/in cover the location you hit is and, when suffering Critical damage, exactly what horrible effect is inflicted on the character. If you examine the tables, you may note that being hit in the body/extremities tends to be slightly less fatal than being hit in the head - the head is usually the worst place to suffer critical damage. There's no general rule I'm aware of that states if you take ten wounds in a single hit that automatically destroys the hit location (unless you're talking about taking ten points of Critical damage, as the 10+ effects do generally involve the obliteration/removal of the affected location - but you do have to get through the target's Wounds first).