Yes, but i dont think he doesnt mean runt as an adjective. As an adverb, like in the sentence "han svänger runt", i guess for me, "runt" feels like to go around a certain object in circles, as if running around the fire repeatedly, while "omkring" would be when you are just situated around something, having something lie in the centre. Could any native Swede or mod correct me on this?
Vi sätter oss means the act of sitting down, as in moving from a standing position to a sitting position. You can not translate this into We are sitting around the fire because in that sentence, the people are already seated around the fire in a static position (that would be sitter in Swedish).
Both mean "around", but only "runt" can also be an adjective meaning "round".
In many cases (for "around") they mean the same and both can be used, but there are some exceptions. For example, when describing motion and having an object but no preposition, only "runt" is used.
Vi sitter runt/omkring elden (we sit around the fire)
Jag springer runt huset ( I run around the house)
Barnen springer runt/omkring på gården (the children are running around in the yard)
Jag kommer omkring/runt klockan sju (I'll come around/about seven o'clock)
Tornet är runt (the tower is round)
The past tense of sitter is satt: vi sitter, vi satt, vi har suttit.
But here we have the reflexive verb sätta sig 'sit down' which is like this: vi sätter oss, vi satte oss, vi har satt oss.
The difference is that sitter is static but sätter sig refers specifically to the act, the "movement" of sitting down. "getting seated" so to speak.
Read the comments above. “Sätter” means to put/set/place, so this sentence translates literally as we set ourselves around the fire which contains the meaning of movement into a seated position. The sentence you suggest does not have that meaning but rather portrays people who are already seated.
You could say “we seat ourselves around the fire” instead if that is a clearer translation?