Originating from the South, the term fye is simply the word "fire" with a heavy southern accent added. "Fye" and "fire" can be used interchangeably as adjectives in this sense, depending on the preference of the speaker.
"Damn, these burgers are FYE!"
"Those kicks are FIRE!"
Describing a person:
"You see that girl over there? She's lookin FYE today."