If you yell out "You're on fire!" to someone in a worried-sounding voice, they will think that their clothes or hair are burning. But if you say it in a cheerful way, it means that they are having a string of successes.
For example, you can use this phrase to talk about an athlete who is playing really well and scoring a lot of points:
LeBron is on fire tonight!
Sports are a common situation for saying that someone is "on fire", and sales are another. (Actually, salespeople use a lot of sports-related language.)
"You're on fire!" is a really casual and friendly-sounding phrase.