This page describes the Fireplace Tool and how to use it.
Fireplace ToolFireplaces in the Object Catalog for a complete list.
Fireplaces can be placed against a wall with part of the chimney showing inside or not showing if the design allows. Most fireplaces have some recolorable parts.
Fireplaces can be placed on horizontal walls as well as regular ones. When placing a fireplace, make sure your Sims have adequate room to get around it without causing a traffic problem.