Mod developers can use the burn function in their mods to make fire and blow_up function to make explosion. Look in the api.lua code.
Caution!!! The more bombs you put together nearby, the bigger explosion you get. I don't recommend you putting more than 4 bombs together, this can cause lags and serious destruction.
If you're going to make a big explosion, don't use the match exactly on the bomb or you will die. Make a 'road' of flammable materials to the bomb from your position. The fire will spread slowly (if you make it with wood) or fast (leaves) and come to the bombs :)
0.1.2
Updated to the new API. Changed some textures.
Needs 0.4.dev-20120122-1.
Implemented SMOKELESS variable. If you don't want the mod to create laggy smoke, go to init.lua and change SMOKELESS to true.
https://bitbucket.org/neko259/fire/downloads/fire-0.1.2.tar.bz2
Repo (changelog at the wiki):
https://bitbucket.org/neko259/fire/overview
Old versions downloads:
https://bitbucket.org/neko259/fire/downloads
Thanks to Figec for textures.
Crafting
Match:

Match box:


Bomb:

(that's mese, not gold :)
Screenshots:

TODO
Lighter.
Licence
GPLv3