Why? That looks like a guaranteed way to result in an accident for a pretty minor novelty. If nothing else, using leds that look like candles would be less maintenance with the huge upside that they are incredibly unlikely to be able to start a fire.
Some people in Central Europe still use real candles on the Christmas tree. Of course, you place the candles carefully and don't leave them unattended.
(I have no idea how common it is, but I've seen the candles and brackets for sale.)
It is fairly common in Germany. There’s a special size of candles that fits those holders (Christbaumkerzen) and they’re a thing you’ll find everywhere in shops around Christmas time. I’ve never had a tree with LED in my entire life.
You must observe some safety rules, have a bucket of water or an extinguisher at hand (not under the tree) and never leave the candles unattended. And yes, be careful where you place the candles. Can’t have a branch that’s hanging over them.
If it was a guaranteed accident like you suggest people wouldn't have done it for decades. Not the safest thing, but judging by the news it seems not even close to all the injuries weeks later from fireworks.
I've got to wonder if part of the reason it seems insane is because we've gotten used to single/dual generation households. If you light candles on a tree, then it's a commitment for you or your partner to be in the same room as that tree until the candles are extinguished. But if there is an older generation sitting around to be on firewatch, then it doesn't seem so limiting.