How does a 'fire tornado' form?
They form due to strong convective forces, coriolis effects, local wind and weather, and local topography.  The fire effectively creates an intense localized low pressure cell due to the heating of the air which can behave similar to any low pressure system.  I haven't seen one on flat terrain like your picture shows but when performing slash burns for silviculture purposes you can have very large tornados form along ridges as the fire burns uphill.  These tornados can extend outside the fire zone under the right conditions but generally die out soon once removed from the source of heat.