The Olympic flame is lit in Greece.
It is lit at the place where the ancient Olympic Games were held.
The place is called Olympia.
The flame is used to light the Olympic torch.
The Olympic flame in ancient times
During the Olympic Games in Ancient Greece, sacred fires were lit in temples at Olympia to honour Zeus, the king of the gods, and also in the temple to his wife Hera.
These Olympic fires were lit by torches carried from a sacred flame that burned always at the Temple of Hestia in Olympia, (Hestia was the goddess of the hearth or fireplace).
The Olympic fires were kept burning until the Games were over.
https://www.olympic.org/news/the-history-of-the-olympic-flame
The Olympic flame in modern times
The Olympic flame was first included at the modern Olympics at the Amsterdam Games in 1928.
A few months before each modern Olympic Games, the flame is lit in front of the ruins of the Temple of Hera. Actors dressed in traditional costumes play the part of the priestesses of the temples.
The flame is lit using the same method used thousands of years ago in Ancient Greece. The sun’s rays are captured in a parabolic mirror which causes intense heat and allows a flame to burn.
The Olympic torch is lit using the flame and given to the first runner in the torch relay. The runners in the relay carry the torch through many countries on their way to the Olympic city.
The Torch Relay
The last runner carries the torch into the Olympic stadium during the opening ceremony. The flame is then lit from the torch and remains lit until it is extinguished during the closing ceremony.
The torch relay symbolises the passing of Olympic traditions from one generation to the next.
There was no Olympic relay in ancient times, although torch races were held as part of religious festivals in parts of Greece.
Read more
http://www.olympic.org/olympic-torch-relay-origin-values-ceremony