But those tiny little threads of steel wool are so thin that there isn't any room for the heat to spread out so the iron quickly reaches its ignition temperature.
Well, that's because in order for the fuel to combust and catch fire, you would need it to be heated to its ignition temperature, which is the temperature where the fuel will get hot enough to burn.
Well, for a few good reasons first because metal is such an excellent heat conductor it disperses heat that's applied to it, which makes it harder for any particular part of it to reach its ignition temperature.
If you have a bonfire, you have all this wood there, you build it up, and at some point enough logs get burnt and that thing collapses and you get this huge burst of sparks and it gets much brighter.