Since I'm getting plenty of great for my other question "How can a nine tailed fox catch its prey? Thought I might try to get ideas for both fox-fire and illusions.
So far I've thought of bioluminescent fungi which I called "fox shrooms" which are type of agaric fungus that glows a bluish-green in the darkness.
Here both the fox and the fungus share a symbiotic relationship which benefits both species, where the fungus lives on the dirt and decomposing matter often caked in the fox's dreads and as a bonus, the fox helps disperse the spores.
The lifecycle of the fox shroom begins with it as spores that landed and thrived on a passing individual's faux tails, they then later developed into fully grown fungi as they feed on the rotting matter and finally the cycle begins again as the fox disperse the spores through tail whips or tail rattles which then end up on the tails of another passing individual (don'tBut how though).
The fox in return uses the spores for two things. One that it can manipulate quick hallucinations by agitating the fungi via intricate tail whips to release a spray of spores in the form of a powdery substance called "Fox powder" to have a flammable thing which is a shimmering bioluminescence in the manner of a will o wisp.
The structure could reflect moonlight, producing an apparent shining effect. The powder could also contain fast-moving hallucinations which results in weird shape-shifting illusions in the form of a bright flame. Thishelp create fox-fire would be used as distraction display for predators.
And if the fox was cornered or approached by hungry predators, it would shake its tails, agitating the spores in the enemy's face which could cause hallucinations which are wrongly labelled as "illusions" by us humans who tell tales of illusions made by the kitsune (if inhaled of course).
Besides self-defence, the mushrooms could be used as decoration for sexual display and the mushrooms could go through dormancy during its first winter with the fox therefore giving the fungus the ability to create hallucinations.?