I have played 2 play-throughs and I want to say that I don't know how to use the torches. I know I can look it up. Just want to post this in case a developer reads these forums.
Going to look how to use them right after I post this.
You can 'dip' a torch you equip on a fire in the environment. Strangely, while characters can light any candle, torch, fireplace they come across, it seems they can't light a torch they're carrying and need to light it on an already existing fire.
It seems to me that it says in the item description how to light it. I know I saw it somewhere in game, because I knew the answer just reading the topic title, before I read the thread.