SHellac now...that's a different story. That ain;t varnish. Shellac, being made from lac bug excrete (you can eat the stuff if you dare, it's safe) and denatured alcohol, should not give off many noxious fumes when burned. Additionally, when the shellac dries, the alcohol has evaporated, and you're left with a coating of lac. I'm not a chemist, so maybe when burned there's some chemical reaction that makes the fumes unsafe, but I'm just reasoning it's relatively safe based on the ingredients. ALso, if you're dipping matches in shellac, you ought to be able to handle them and dip the other end in about 10 to 20 minutes, depending on the freshness of the mixture.

Varnish now is different. While I don;t think that lighting varnish-soaked matches is going to harm anyone, including nearby insects or the ozone layer, it stands to reason the fumes would be noxious...and dangerous if burning, say, large items soaked in it.