A fireplace works by drafting, or the pulling of fresh air into the firebox from the front, while sending smoke and hot air up the chimney, or flue. This creates a circular effect that continues to build on itself. The hotter the fire, the more hot air goes up the flue. The more hot air that goes up the flue, the more fresh air that is pulled into the firebox. The more fresh air in the firebox, the hotter the fire burns.
The fireplace damper is the mechanism that controls and moderates the fire cycle. It is a small flap of metal that sits across the flue where it joins the firebox. By pulling or twisting on the flue handle outside the firebox, the homeowner can adjust the flue anywhere from wide open to completely closed. The more open the flue, the hotter the fire cycle burns. Moving the flue to a partially closed position reduces the heated air from leaving the firebox, keeping more of it in the room but also reducing the fresh air necessary for a hotter fire.
If a fireplace is used for heating a home, the flue is usually adjusted at night to a mostly closed position. This creates a smoldering fire instead of one with flames. The heat stays in the firebox; however, the embers stay alive and well under a layer of thick ash. The next morning it is much easier to start a new fire with a warm firebox full of hot embers.
Knowing how to adjust a flue to keep the smoke from backing into the room, while having the temperature you want, is a matter of learning by trial and error. Different types of wood and how well it is seasoned affect the amount the damper needs to be open. Adding new wood to an existing fire often needs the flue to be opened widely so that the larger new piece can quickly catch on fire. If you want the fire to last longer, you must remember to then readjust the damper a few minutes later.