The old woman has collected many books and magazines, and is both determined to keep them and resigned to the power of the government. Instead of giving up and allowing her books to be burned for punishment, she chooses to remain in the house and ignites the kerosene herself:
"Go on," said the woman... she had come to weigh them quietly with her eyes, her quietness a condemnation, the woman stood motionless.
Beatty flicked his fingers to spark the kerosene.
He was too late. Montag gasped.
The woman on the porch reached out with contempt for them all, and struck the kitchen match against the railing.
People ran out of houses all down the street.
(Bradbury, Fahrenheit 451, Google Books)
The people running out of their houses want to watch; their lives are so isolated and entrenched in the meaningless emotion of television that this personal tragedy is a wonderful entertainment. They watch and see both that a person was punished for defying the government, and that they have no choice but to submit. If this is their fate, it is better to simply go along than risk being killed. Human life is so worthless now that her burning is a spectacle rather than a warning; they enjoy the view, return home, and for a few days they will all have a story to tell. The moral courage of the old woman is lost on them; only Montag is truly affected.
The reason everyone comes out of their own houses to see another house being burned down is to remind them that if they are caught with a book in their house, then their house would be burned just like the others.