In this song, "to be on fire" means "to be unbeatable." There is no circumstance in life that this girl cannot overcome.
Listen to the song, read the lyrics, understand the idioms.
"To walk on fire" usually means 'to do something dangerous" or "to be in a dangerous situation." But if one successfully walks on fire, one can gain a lot of self-confidence.
Other ways that the girl is described:
"hotter than a fantasy"
"the world she's living in is "on fire"
"she's burning it down" ("it" may refer to the ground, that is, the world, or everything one encounters in life)
"This girl" is full of self-confidence in many different situations and she will be a success in life, and also she will attract the attention of others because of her confidence and success.
There are some contradictions: "to have one's feet on the ground" means to be responsible and practical." whereas "to have one's head in the clouds" means to be impractical and maybe irresponsible, because one is dreaming or in love. But she will win in both circumstances.
Nothing can defeat this girl. She is on fire. She is unbeatable. She will succeed in life. Sing it and be proud, girls.