A magma kiln is a special variation of the basic kiln that uses magma as a source of heat, instead of fuel.
To function, magma kilns must be built with at least one of the eight edge tiles occupying an open space with at least 4/7 magma on the next floor down. If the only opening to the magma is under the impassable tile of the building, then magma creatures won't be able to enter the workshop area through the opening; otherwise they can.
Note that both pig iron and steel production still require fuel as a source of carbon for the reaction.
Magma kilns do not consume any magma from their magma source — you can use a single tile of magma below the kiln as an infinite heat source.