As an aficionado of very spicy foods, and a sufferer of irritable bowel syndrome, I have an extensive familiarity with this very undesirable affliction. "Ring of fire" occurs when undigested pepper matter passes all the way through the digestive system, intensely irritating the anus upon defecation. The agent of irritation, of course, is the same chemical that gives peppers their "heat," capsaicin.
Ring of fire syndrome generally varies in intensity depending on the type of peppers consumed, and the medium in which they are consumed. I have eaten some incredibly hot vindaloos and curries without having the slightest symptoms. In fact, no Indian food has ever given me ring of fire, though the second hottest thing I've ever eaten was a super-hot madras specially made to knock me on my ass. The reason, I believe, lies in the fact that Indian preparations involve completely crushed and powdered chiles, which are easily digested. If all of the pepper matter is pulverized entirely, it has more surface area and is more likely to be "deactivated" by the digestive system.
When whole hot peppers are consumed and not chewed thoroughly (i.e. those delicious as all hell Louisiana Tabasco peppers), watch out. Any particularily fiery salsa that contains actual pepper chunks and seeds is more likely to be bad news. Crushed red peppers served at pizza restaurants are barely hot at all in the mouth (to me), but they aren't too kind at all on the way out. I believe this is due to the fact that the outer coating of the pepper is comprised of cellulose, which is just about impossible to digest. The capsaicin is thoroughly absorbed into this after the pepper is pickled, roasted, dried, whatever -- and when it passes through the body undigested, significant quantities of the chemical sneak out with it. If the pepper is crushed into fine powder, the cellulose is broken down enough to where the body can thoroughly metabolize most of the chemicals trapped within.
I guess other people do have different experiences. For me, moderately hot sauces like Tabasco, Sriracha, and Durkee's Red Hot have no negative effects, but I've heard of people who get ring of fire from the slightest dash of salsa. I guess it all depends on your intestinal fortitude. Remedies include Preparation H or Aloe Vera, but I'd never use them myself. Fortunately, ring of fire pain tends to disappear rapidly after thoroughly wiping and standing up, but one would be wise to firmly "dab" rather than abrasively "wipe."