Why did Ramsay Bolton burn Winterfell?

Bolton Kings are said to have flayed many Stark Kings and worn their skins as cloaks. Eventually the Starks prevailed. This could be a payback for that defeat which reduced the Boltons from Kings to Lords. In any case, burning Winterfell is in line with the Bolton traditions.

Who torched Theon Greyjoy?

Theon is subsequently brutally tortured, flayed and castrated by Ramsay, who forces him to rename himself Reek, and beats him until he submits to his new name.