Up until this point the Gemara was discussing the use of basalm as a potential fuel source for Shabbos lights. It mentions 2 reasons why Chazal prohibit its use for this purpose.
1) It's very flammable/combustible, which is a potential concern for the welfare of your house and property.
2) We're afraid you'll make use of some of the basalm oil in your candelabra and thus reduce the amount for the Shabbos lights, which is akin to causing them to extinguish.
The Gemara then relates the following story:
A mother-in-law suggested to her daughter-in-law that she put some basalm on as perfume in order to smell nice, which she younger woman did.
Next the mother-in-law asked her daughter-in-law, who just so happened to be covered in this wonderful smelling, yet highly flammable substance to go light a nearby lantern, which she did - and promptly burst into flames.
|Picture by DL Smith|