I am not a practioneer of Chinese medicine, but I think that the draining of fire means the using of herbs, which eleminate heat or fire toxins. This may occur by toxin accumulation from an infect or obstruction of the intestines as well as an accumulation of water.
There can be different meanings, and methods, to "drain fire", because there may be different fires. In general it does refer to reducing heat. This can be an excessive or repletion heat, such as an infection, or a deficiency heat, such as the heat of peri menopausal symptoms. Fire indicates however a strong, in most cases excessive heat. Cold herbs would be used to drain fire.