Bonfire Glade was a reminder of the strange 'war' that took place between the malevolent trees of the Old Forest and the Hobbits of Buckland, sometime between T.A. 2340 and T.A. 3018.
The trees attacked the Hedge that protected the Bucklanders, and in retaliation, the Hobbits invaded the forest and burnt hundreds of trees in a huge bonfire. The Bonfire Glade was the place of that great burning, and even after many years, the trees left it an open and empty place.
Merry led Frodo, Sam, and Pippin to the glade and out the other side on a path leading into the heart of the Old Forest.