Rauchbier is a German-style lager brewed with rauch (smoked) malt. At one time, smoked beer was commonplace, not the novelty it is today. Before Daniel Wheeler invented his drum kiln and changed the course of brewing history forever, the only way to dry malt was directly over an open fire. The process ensured every beer had a smoky shade hanging over each sip. For maltsters and brewers of the day, it was an unwanted element, one they fought to be rid of.
Many things influenced the final flavor of these malts, including the type of fuel used and how long, and at what temperature, the malt was kilned.
The three main fuels used were wood (which itself can impart a variety of flavors depending on the variety used), straw, and coal. Coal was considered the least favorable, because it was expensive and dirty, no doubt imparting some less-than-optimal flavors.
What fuel was used depended a lot on what area of Europe you were in. While an English maltster might use coal or wood, German brewers (often German brewers would also do their own malting) did not use much coal, instead depending on wood alone.