Hi guys,
Seems there's a spot of confusion as to how to Fireflight works, and in fairness, it's not very well documented at this time.
Briefly:
1) Fireflight doesn't store any passwords of yours, it is able to replace common static passwords with one-time-passwords
2) You don't need to trust Fireflight as your passwords are not stored or handled by the company
3) Each authentication vector defines it's own security strength (i.e. a bank will have stricter requirements than a forum on the internet)
4) Fireflight does not use SMS or any kind of network traffic, cellular connectivity is not used
5) The application prompts for a PIN every time it is launched, and the PIN is used to self-encrypt the application
6) All authentication tokens issued to you can also be suspended so that they will no longer work if your phone is lost or stolen
7) Fireflight generates OTPs using the industry standard and publicly vetted methodologies and enryption algorithms accepted by the OATH organisation and US FIPS standards
8) Fireflight will launch with a FireID token bundled, free to the consumer, which will allow you to login to any OpenID enabled website using Fireflight generated OTPs -- look out for a partnership with ClickPass.com as well to make this even easier
Hope this clears some things up!