Why does the monster set fire to De Laceys' cottage?

He is upset by the reaction the "seeing" deLaceys have to him. He does not understand why they would be so hateful and so scared.

On the surface, the creature has given up hope on humanity. He knows the cottagers or any other human being will never accept him. He seeks to destroy that which once held hope for him. The idea of fire is pivotal to Chapter 16. When the creature sets the cottage on fire, it is as though he were giving vent to "the hell he [bears] within [himself]" ­ a hell that hearkens back to that described by Milton in Paradise Lost, as we saw in the previous chapter. The fire consumes the cottage with its "forked and destroying tongues"; this image alludes to both the fires of hell and the forked tongue of Satan, who took the form of a snake when he appeared to Adam and Eve in the Garden of Eden.