Why dose this mod make it so Fire Resistance no longer prevents you from taking damage when on fire?

That is intended game design of the mod to have a consistent damage calculation. Vanilla fire resistance should be replaced with a new potion effect (with the same name), but the calculation will now use my system.

The potion now has 2 levels. The first one gives you 50% resistance and the upgraded one gives 100% resistance. To upgrade, apply glowstone dust in the brewer.

I hope this helps you understanding, why the issue isn't realky an issue :)