Besides making light, fire is good for a few things, but killing aliens is indeed not really one of them unless you use a flamethrower mod. The most disappointing ones are the incendiary rockets where the big number makes you think it'll be awesome and then it does nothing.
It can:
- Slowly kill aliens in a difficult to access area, without destroying anything. This is especially good if you can manage to set the interior of a UFO on fire before breaching. It won't destroy anything, not even the squishy stuff on the floor, but eventually it will kill some aliens or at least damage them so they are easier to kill when you breach. Especially good with the incendiary grenade mod on crashed UFOs (since you can throw the grenade in through the hole in the roof).
- For base defence missions with a long bottleneck, setting the whole thing on fire can work well at tenderising the aliens as they walk to you, without damaging any of the loot, unlike shooting rockets down the hall. It can even put them on the backfoot as they don't want to step in the fire so end up on the defensive in your hangars (less good if they are psi aliens that don't care about distance). You can then keep pushing them back and sniping a few every turn before retreating safely in side rooms.
- Influence where aliens go. Ever thought "This would be a perfect sniping position for an alien"? Set it on fire and it ain't that good any more, as far as the aliens are concerned. You could put smoke there, since aliens only shoot at what they can see, but if you do, you can't see the alien either (and they can still throw grenades).. I like to put a proxy grenade in places I don't want aliens to go to, but if one goes there and dies, I prefer setting the place on fire to deter any other, since putting another proxy would destroy the loot if triggered.
The advantage is mostly preserving loot while damaging aliens, which is very relevant in some mods (Piratez!) and always good for your balance.
