|Campfire as seen in Hytale screenshots
The Campfire was first seen in the opening shot of the Hytale announcement trailer, with a Player cooking a Kebab over it. This shot suggests that the Campfire also has a functional use, than just being a light source, that it could potentially have a cooking mechanic involved. However, this is not fully known.
Cooking is a mechanic in the game that aids the quality or even allow the preparation of certain Food. You can cook at some designated Blocks, such as a Cooking Bench that allows this process to occur. So far, not much else is known about this process.