Fire blocking in stud walls is required in wood framed buildings to stop drafts in the cavities between framing members. These spaces can create drafts that will allow fire to spread readily if not dealt with. In other words, these cavities can act like the flue on a fireplace and actually promote the rate in which a fire could grow. The way to stop this is to slow down the air flow as much as possible with an obstruction. A good rule of thumb is to block in between the studs where any framing is nailed into the side of a wall. The following information is based on building codes located in section R302.ll
on page 82 of The 2012 International Residential Code.

What to Fire Block

Every 10′ on tall walls
Drop ceilings, cove ceilings, any ceiling attached to studs that keep on going into a gable or another story
Stair stingers (the building code calls for a block at the top and bottom of each riser, but most inspectors will allow a nicely fit block with beveled ends running the same angle as the stringer )
Shed porches that attach to a tall wall at the ceiling and the roof line
Fur downs including drop down tray ceilings
Bonus rooms if the floor level ties into a stud wall

Material for Fire Blocks

The blocks must be as wide as the wall. For a 2 x 4 wall, use a 2 x 4 block, for a 2 x 6 wall, use a 2 x 6 block; its that simple. The 2012 International Residential Code allows for the use of materials other than standard lumber, although I do not recommend any of them. Its just to easy and reliable to use 2 x 4 blocks in a 2 x 4 wall. However, the other materials include 1/2″ gypsum board, a 16″ piece of fiberglass insulation, 3/4″ particle board, 23/32″ structural panel, 1/4″ cement based mill board, or 2 pieces of 3/4″ lumber with broken lap joints.

The problem with any of these other materials is that the the fire block must retain its integrity. Remember that the plumber, the electrician, the security tech, and the insulators all will be working around the fire blocking.

Installation

The blocks should be at a position in the wall right below or even with the ceiling or whatever else is attached to the wall. For example, if you have a drop down tray ceiling that has been furred down to 8′ off the floor, then the fire blocking can either go flush with the bottom of the 2 x 4, or it can set below the 2 x 4. All that matters is that the draft is stopped.

There should no more than 1/8″ gap on any block.
Blocks between studs that are 16″ O.C. should be 14 1/2″, but measure each block.
Toe nail one end and face nail the free end. Use at least 3″x .120″ nails.
Make sure the blocks are fastened good enough to climb on.