To use the cloaked flamethrower effect you must be at least lvl 72 and be a spy. first equip the flamethrower and then go cloaked with the sneak speacial. then enable free targeting and start blasting away!
note: this is only useful for distractions and for fun lol it will uncloak you if you actually attack but its pretty cool to blast non pvp people with a flame thrower when they dont know whos doing it lol. and the distraction is a useful strategy when pvping too.