Who knew? Julieanne Kost did:
This new feature is designed to render realistic flames on user-defined paths. You need to create your path first (using the pen tool or any of the shape tools), then choose Filter > Render > Flames. (Note: you need to have a pixel layer targeted in the Layers panel as a landing place for the flame to be created, not a Shape, Type, or Smart Object layer. You can however convert type to paths or use the Type Mask tool to render paths for letter forms).
Check out the rest of her post for more tips & examples.