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From Acupuncture Today:

Moxibustion

Moxibustion is a traditional Chinese medicine technique that involves the burning of mugwort, a small, spongy herb, to facilitate healing. Moxibustion has been used throughout Asia for thousands of years; in fact, the actual Chinese character for acupuncture, translated literally, means "acupuncture-moxibustion." The purpose of moxibustion, as with most forms of traditional Chinese medicine, is to strengthen the blood, stimulate the flow of qi, and maintain general health.

Indirect moxibustion is currently the more popular form of care because there is a much lower risk of pain or burning. In indirect moxibustion, a practitioner lights one end of a moxa stick, roughly the shape and size of a cigar, and holds it close to the area being treated for several minutes until the area turns red. Another form of indirect moxibustion uses both acupuncture needles and moxa. A needle is inserted into an acupoint and retained. The tip of the needle is then wrapped in moxa and ignited, generating heat to the point and the surrounding area. After the desired effect is achieved, the moxa is extinguished and the needle(s) removed.