[Drunken F00l]

You need to lead targets when playing pyro. To perhaps better explain, here's a quote from TF2 wiki.

The flames you see on the screen do not match the flames' "real" presence on the server. The "real" flames seem to lag the graphics. This is why you often miss fast classes like Scouts and Demomen with your initial burst. Lead them a little to compensate. This can be exploited to your advantage, esspecially against enemy pyros - if you fire while retreating backwards in a straight line, an enemy pyro pursuing you will not be damaging you due to the lagging flame hitbox, but will be taking damage from your flames despite visually being just outside them.

I generally don't like TF2 Wiki because they don't usually know what they're talking about (e.g. heavy civilian) and it's poorly edited, but this one is mostly right (there's a sentence I don't agree with even in this small quote).