This is a very common question that we find all the time online. The Accessory Shop is located in Traverse Town right after you are swept away from Destiny Islands. Inside the shop you find an empty fireplace which you can light after you learn Fire magic. The answer to this question is rather bland – it just makes the chimney smoke! Isn’t that neat? And you can also cast Blizzard on the fire to put it out.
Some people think that the treasure chest on top of the Accessory Shop is actually covering the chimney, and when you light a fire it knocks this off. But actually the chest is always located next to the chimney. And you can go up there to open it even before you learn Fire magic from Donald.
So this is just another neat interactive element of the game that doesn’t really do anything useful. But it sure is a cute effect.