They spawn in random places within the dungeon. Once they spawn, they are already aware of the player’s location, no matter how far they are and they immediately start moving slowly towards them. As time passes, new babies continue to spawn, which means that the more time the player spends in the dungeon, the more fire babies will spawn, becoming even harder to avoid them. They can pass through closed doors and traps without being harmed. Their behavior varies, depending on the candle status:
If no candle is lit Edit
The babies crawl very slowly. Once close to them, they lie down and stay in that spot until the player moves away from them. Touching them will make the player catch fire and receive some damage. Recieving 2 hits from them results in death.
If a candle is lit Edit
Alternatively, they could also be called "Bomb Babies". They move faster while a candle is lit, no matter how far the player is. Lighting one or two candles in a row after leaving a Fire Baby behind will eventually allow it to catch up to the player and even bring some company (more Fire Babies, which spawned elsewhere). When close to the player, they will stand up and start pressing their heads using their hands, until they explode (splatter explosion) and harm the player. Two explosions (with a short cooldown in between) can kill the player.
Unconfirmed theory Edit
Each time the player lights a candle, a new Fire Baby spawns somewhere inside the dungeon. This came from observing the facts, but clues are not yet enough to prove this. If we find out it's true, this piece of information will be noved to the "Behavior" paragraph, as a proven mechanic of the Fire Babies.