Kindling is used in the Lunar Diplomacy quest. The Oneiromancer gives the player magic kindling to use in the ceremony to travel to Dreamland.
The Oneiromancer tells the player the magic kindling is from the first magic tree that ever grew.
The player uses the Waking Sleep Potion on the kindling to make Soaked kindling. The player then places the Soaked kindling on the lit Ceremonial Brazier to enter the land of dreams. If the player leaves the Dreamland or has to log out, more kindling can be obtained from the Oneiromancer. If the player has an extra set of Lunar equipment stored in their house, they may enter a dialogue loop where they ask for another set of armour and the Oneiromancer refuses them before they can ask for more kindling. This is resolved by removing the armour and having it in your inventory while speaking to the Oneiromancer.