See attached image. The only thing I can think of is the campfire...and I don't have anything cooking on there.
It looks like you have a mine nearby. Are you sure you haven't just mined over to that spot and placed a torch?
This has been a known bug since 0.6. Leaving floating smoke balls all over the place. It happens when running around with a torch (in your hand or on in your inventory). You can reproduce it in any vanilla (non-modded) server. Confirming it still does it in 0.7 as well.
ver .7.1, I was crouching and moving a bit and got a light and even some smoke as if my torch was lit, but it was not. It stopped when I stood up, but bug.
Bug seems to be fixed with newer patch. From patch changelog "- Plow block particles no longer left behind."
Good to hear.
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