It's a line from "Happily" by One Direction :)

Yes, as Phi commented, "We're on fire" does mean something positive thing to say to a group, meaning something like "we're doing out best [well done everybody]!". Maybe you'd say it to your sports team during a game, or at half time, if you're winning! Of course, it literally means "We are alight" or "We are burning", but it's highly unlikely that someone would say that to you, unless their house pr clothing was on fire. ...and I sure hope you know what "now" means ;)

Thanks, Phi! :D

It is a positive saying, one that usually means, in a way, "We are at our most productive" or "We are awesome." Another phrase would be "We're on a roll."