1) Light which comes from the point at the top of the flame goes straight towards the bottom of the screen.
2) Light which comes from the point at the bottom of the flame goes straight towards the top of the screen.
3) In this way the light coming in a particular direction from each point of the flame, will be able to enter into the pinhole and the light going in other directions is blocked.
4) This leads the formation of an inverted images.
5) If we increase the size of the hole of pinhole camera, we get blurred image on the screen.