Fire. It is not an easy thing to simulate - even for voxel games that take liberties with reality...
Currently (V1.9.14); Flammable blocks burn, and fire does indeed spread to connecting blocks. Ignitable items don't however ignite - like extinguished torches or ore-blasters, piles of grass or on-ground items in general.
An active fire DOES destroy a block that is 'burning' - after a set time; but does not 'char' or mar it in any way. The burned block simply vanishes from existence, leaving no trace beyond a puff of particle smoke lingering in the air.
Flames don't generate real heat or smoke that lingers beyond (still neat) particle effects. Entities standing directly ON a burning block take no heat damage - and since there is no 'smoke', neither any smoke inhalation ill-effects.
Some ideas for completing this feature, could be;
Item and Ignitable blocks - do 'catch-fire', whatever that means ; flame activates a fuse - or re-lights or does something else; or crumbles into a pile of glowing embers once consumed...(I think this would also apply to entities exposed to high enough heat)
Fires generate a 'new' kind of block - ASH that is the end-result of combustible blocks finishing their flame-entropy decay process. It behaves similarly to charcoal layers. If somehow a burning block is extinguished (rain, a bucket of water - even a sprinkler?); it will still show signs of damage from that event (decals - like when 'mining' a block, but scorch). This may mean a new set of textures; 'Scorched' wood... a wooden house would end as a large pile of ashes where the wooden beams or walls once stood.
Fumes from fire - can be nearly as deadly as the flame itself. Inhaling these fumes should at the very least be quite harmful - for anything living that respires, or can be harmed by heat (which is everything ATM). Having an entities 'head' or body be in contact with or enveloped with a 'smoke' or 'hot-combustion-gas' gas-block should do instant heat damage, and some kind of asphyxiation count-down. Naturally these smoke or gas-blocks are cellular automata that travels upwards, cooling and possibly expanding into nearby air blocks (at the cost of its temperature, and particle 'density' properties). For bonus points - a layer of soot could cover surfaces that have been heavily polluted.
Side-effects, and related thoughts;
Could items be doused with water / fall into a stream or pond before they crumble into ash, does it make an ash pile, how long do they 'burn' ? What about sand to douse flames, or piling gravel or dirt?
Does wind affect the conduction of 'fire', like how wildfires spread? Would a rainstorm prevent a firepit from working - what about a bloomery or forge?
Smoke would potentially interact in a complex way with rain / water - perhaps turning it into steam?
Lava. It would become exceedingly deadly, due to all the above properties - and being a natural emitter of extreme heat, becomes nearly unapproachable (unless protective gear is worn).
Chimneys needed now! (Half-blocks, slabs and stairs - these need to be 'gas' transparent...what about trap doors or non-solid block-entities?)
Pyrolisis; accidentally turning underground hobbit-homes into impromptu charcoal pits...(and getting ash when you wanted char...from a void/hole in the pile)
Anti and Pro fire related tools;
Water & Sand buckets for dousing flames.
A Siphon pump - which can be used for two purposes...
Torches become even more tricky to use in a wooden house's blacksmithery