This is my brass tinderbox which I carry with me when in the woods. NOTE, it does NOT have a hole in the lid. A hole in the lid would only let in damp and ruin the tinder inside. The tinderbox is used to prepare plant tinders, but you do not need a hole in the lid, and you DO NOT place the tinderbox in the fire.
Tinder is prepared by simply charring directly in the fire on the end of a pointed stick. Once charred on the outside ONLY, it is placed in the tinderbox and the lid is closed to smother the smouldering tinder.
The misconception regarding the hole in the lid comes from the item below.
Above is a tin used for charring linen or cotton cloth. You will note it has a hole in the lid with a twig stuck in it. This is a modern invention, NOT a period one. In the 18th century charred tow rag was used in the homes, rarely in the wilderness. A person travelling from his/her home may well use charred tow rag in their tinderbox, but a woodsman or woods woman would not.
Amadou was also sold to households in England and Europe by tinder sellers. In this case the Amadou was treated with potasium nitrate to aid in its catching a spark.
Tow rag was charred directly in the fire, placed in the tinderbox, then smothered by placing an inner lid on top of the tinder. The same type of preparation was done using wooden tinderboxes.