The Gauntlet of Fire is designed by the Dragon Lord prior to it, in coherence to how they believe a true Dragon Lord should be. The hazards on said course vary depending on the Dragon Lord, though most of these involve physical obstacles and traps, leading to the Bloodstone Scepter. Whoever manages to get said scepter first, and make it through the competition is considered the brand new Dragon Lord.
In the one present in "Dragon Lord", the gauntlet includes a fly overseas while being attacked by Sea Worms, dodging Slringtails along the shoreline, and navigating a cavern within a volcanic island in order to reach the Bloodstone Scepter.
The event is the main focus in the episode: Dragon Lord. Spike, Scarlett, Ember, Garble, and Amethyst (disguised as a Dragon), amongst many others were in competition to keep Equestria safe. Unfortunately, this Gauntlet of Fire was sabotaged by a Changeling disguised as a Dragon, who destroyed the scepter and stole the bloodstone for Chrysalis, abruptly forcing the event to stop altogether.