In the real sense....like in a forest, if you saw smoke, it would mean there's a fire. And that would be pretty much absolute.
In terms of people....An easy analogy would be...someone gets put in jail (smoke)....that probably means he did the crime (fire)....it's not so absolute with people, tho.
something that you say which means that if people are saying that someone has done something bad but no one knows whether it is true, it probably is true "He claims that they were just good friends and that they never slept together but there's no smoke without fire, that's what I say."
Basically, it means that before smoke can exist, there must be some sort of fire to produce the smoke. Likewise, evidence of something probably does not exist without that something existing before the evidence.
It's a phrase. It basically does mean that if there's gossip, there's often some factual basis behind it.