It doesn't ALWAYS happen, it depends on the type of combustible material that is put on top of the initial flame.........A lot of times there is an abundance of flammable material put on top of the initial flames. Such material will not burn until it has reached its temperature of flammability.
If all the material reaches that temperature at relatively the same time then it will all flame up at once........
Excluding electrical fires, why does water not always extinguish fires? The answer is, water only decreases the temperature of the burning object below the temperature required to stay inflamed. Thus, burning buildings that have built up so much heat will require a tremendous amount of water to lower the temperature below the point of flammability......It's not an issue of water blocking any oxygen.
Water gives off a considerable quantity of vapor when it boils. This can be useful when extinguishing a fire, though the fact that the vapor is lighter than air may at times make it less effective than CO2. Soda water seems to work pretty well, though. 8-)