(a) "When it was night, they lit up the campfire and sat round it/sat round the campfire" - OKAY You use "lit" and not "light" because "lit" is the past tense of the verb "to light" and your passage is in the past tense. " (b) "They made a campfire to keep warm/for warmth" are proper. "They sat around the campfire" - OKAY.
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