I'm still very early into the game, I've only just reunited with my crew for the first time. Next to the fireplace there is a bundle of goods that can be burned open with the torch, only thing is, I don't know how to use my torch.
I know I've got one since the last time I used one the game told me to press shift to stow it away, now I just need to figure out how to take it out again.
Before you gain the ability to light your torch without help of an external fire source, you can light your torch at various shrines and lanterns. Just approach it, and you should see the prompt to light a torch.
I'm not 100% sure, but I think you can't light it at bonfires or fires from buildings / forest burning. --- 'My chosen torture makes me stronger / in a life that craves the hunger. / A freedom and a quest for life / until the end of judgment night.' -Devils Never Cry
Before a certain part in the game, you can only light your torch on hanging sconces and Japanese style stone lantern things. In order to do so, just get close and then Hold Down E. You'll see a fire mark start to fill up and it will light. To stow it you hold Shift.
You can't light it from campfires or "environmental" burning. It's usually part of the puzzle where you have to find where to light a torch to light something else. --- Contrary to popular belief, opinions can be, and often are, wrong.