The Salamander's Eye will protect you from all kinds of fiery death, so long as you are actively holding it. It isn't enough to have it in your inventory or even hotbar, it must be selected. Ghast fireballs will be returned to sender, Blaze fireballs will wink out before hitting you, and fires directly on you and around you will extinguish. It's a very advantageous item when stuck in lava, although you still take damage from the initial lava but the damage takes longer to be lethal. The item texture blinks every once in awhile. This item is very useful in fighting bosses such as the Ur-Ghast or even regular Ghasts in the Nether. It is used in the crafting of the Wraith's Eye.