Is there too great a chance of accidentally setting your only pair of undies on fire?
What about putting the undies on a hot rock? Or would the rock explode ...
Make a big fire. This may sound silly and couterintuitive, but the reason is pretty simple.
If you make a small fire you need to put your stuff pretty close to it to have any chance of drying it in a decent amount of time. And if you put clothes or boots near the fire, then you concretely risk to burn them.
While if you make a bigger fire, your equipment can dry while staying at a safe distance from it.
That's pretty much it. For what matters exploding rocks, please see the comment by Benedikt Bauer to this very reply.
Its not necessarily bad as long as you are careful, also somewhat dependent on material.
Generally, you want to arrange your clothes so that they are about a temperature where you could comfortably hold your hand. If your clothes are steaming keep a close eye on them and think about moving them back.
Material is also an important factor synthetic materials such as polyester in fleeces and such like tends to melt if overheated, especially if it gets hit by by embers from the fire. Therefore, be careful when drying them. Wool and cotton clothes are more resistant and only singe if too hot unless you really try to burn them.
By very careful drying boots by the fire, they are easily damaged by too much heat aim to keep your boots at a temperature of a warm day and check regularly.
I've never tried using a hot rock, my concern would be that this may cause local burning due to conduction of lots of heat in a small area.
If you have your clothes by the fire and not in the fire it's not to likely that they burn if they're in a safe distance. It's good to hang it in a safe distance to the fire. But be also aware of the sparks from the fire (if you have synthetic clothes), they can get holes or also start burning in worst case. And your staff smells not so nice when it's in the smoke of the fire. So if you have a big fire hang it up close to the ground. The smog goes normally straight up.
The rock will not explode because of the undies. But it's not so safe for your gear to put it on a hot stone it can melt to the stone.