When an alāta or a firebrand is moved quickly in circles or in any other way, it creates the illusion of circles or lines of fire. When the movement is stopped, the illusions also disappear. They were never produced by the firebrand in motion and hence never dissolve back into it when at rest.
This is a typical example used by the Buddhist school known as Vijñānavāda and successfully adopted by the famous Advaitin Gauḍapāda (500 A. D.). According to the Vijñānavādins, vijñāna or mind, conjures up the external world which has no reality of its own. The mind with a series of succession of ideas is the only reality. The external world appears to be real even as the circle of fire appears to be.
Gauḍapāda uses the same analogy to a different purpose. It is consciousness (or ātman) that appears in manifold forms due to māyā. In reality these do not come out of it, nor do they return to it, for they do not exist (vide Māṇḍūkya Kārikā on Māṇḍūkya Upaniṣad, 4.47-52). The sole reality is the unchanging pure consciousness, śuddha-vijñaptimātra. This section of his Kārikās (the 4th) is named as Alātaśānti-prakaraṇa.
The analogy of alātacakra (firebrand moved in circles) is pre-Buddhist and is found in the Maitrāyaṇī Upaniṣad 4.24.