You can light a cigar with the cedar sleeve still on by sliding it out part way first:
OR once removed, fold it over on itself several times and use it as a cedar spill. You might only need half of it.
This is what I always thought they were for but I don't think I would risk it. I only have a minimal amount of cigars and I would hate myself for ruining one trying to do some fancy lighting.
I did get some good tips from others in this thread though.