Matches can be acquired at the large gravestones of the Temple graveyards located at the Woods.
Matches are important in progressing the story once the Woods are unlock, as they are required to solve the puzzles there.
They are used to catch the attention of the Stone Faces that are blocking your path, and cause them to be attracted to it and move to where it had landed. It enables you to clear your path to dive deeper into the Woods. They are also used to move the Stone Faces to another area, so that you can use your flashlight to search for hidden collectable Items without attracting the Stone Faces to you.
Matches can also be used to expose the Child Spirits and keep them still, since they cannot move when exposed to light. This is necessary when moving about in areas with more than one Child Spirits.
However, be warned that a Match will only temporarily be light. It will eventually go out after some time has pass. This isn't an issue with Stone Faces, but it can cause problems when dealing with Child Spirits as they will only stay still as long as that light lasts to expose them.
- Getting the matches from a grave could be a reference to Haka no hi. A fire yokai that burns at base of graves.