A Campfire is one of the methods of generating stamina while outside of combat. Others may be speaking to a healer or drinking a stamina potion.
There are two types of campfires; permanent ones found in small settlements, and portable ones that the player can carry with them. Campfires are unique in certain properties - for example you can burn charms and create Dyes only with campfires. Burning charms in a campfire can give the user or anyone nearby a wide range of combat effects for an exceptionally long duration of time. As the player levels up, the player will gain access to better charms.
These campfires are the most useful to the player as the player is ensured of their safety, and they are located at useful locations where the player usually would find a large array of N.P.C.'s which usually offer quests. Along with usually being located next to fire they also are found in Safe Zones which assure the player of safety from P.V.P.
Portable campfiresEditPortable campfires can be, as the name says, carried by the player and set up at any location as long as there are not any nearby campfire within a short radius. Portable campfires require firewood to keep them burning for long periods of time where as permanent campfires burn forever. Portable campfires can be attained both as drops and from merchants. They can perform the same functions as a permanent one but can be placed in non-safe zones.
[EDIT] This item is no longer usable.