We all know that fire needs heat, fuel, and oxygen to burn. In most common construction, almost everything becomes fuel given enough heat. Firestops are intended to eliminate fuel or oxygen in a specific opening to reduce the spread of fire. Often these openings are around wires or pipes that go through a wall.
Firestops are especially important around sources of high heat like the flue of a fireplace or woodstove. These should have the correct flashing and fire-rated sheetrock.
Firewalls are used to separate multi-unit structures such as condos. However, utilities have to go through these firewalls. These holes should be sealed well regardless of where they pass through the firewall. Firestop material might be a form of cement or mortar that is fire resistant. Usually these fire-resistant materials have a specific color to identify them. Other materials are intumescent. This means they expand with heat. A very useful characteristic if what is passing through the firewall is consumed by fire, such as wire or pipe.