Controlled by the Enchantress, it is used to track the progress of Luci, their emissary, and therefore keep a watchful eye on Bean and her misadventures within and beyond Dreamland. It acts as a magic portal, allowing the Enchantress to transmit magic through it, such as when she gets Luci to conceal himself within Bean to avoid being discovered by Big Jo in S01E03.
The fire is alluded to as being similar to a television, with the Emperor and Enchantress falling asleep in front of it in one episode, and it showing fuzzy white static - familiar to pre-digital era people - signalling that the "broadcast" has ended. Jerry appears to watch it as if it was a soap opera - the one where the cat and the elf are friends - giving the Oracle Fire a meta-quality: while watching Bean and the others as if it were a TV show, the audience watches Disenchantment, which actually is TV show.
- Jerry: "Is this the one where the cat and the elf are friends?"