The Firebat was the first new unit to be introduced with the campaign dependency (Marine Arena v1.0). The Firebat currently replaces the Hellion, and is currently the anti melee/light unit of choice. Although it does considerable damage to biological types, its main targets would include any units with the "Light" attribute, namely, Marines, Zerglings and Zealots.
Teching the Firebat to Devil Dog will increase movement speed, armor, give 40% wider splash radius, and attack speed. It will also give it +5 damage to armored units, allowing it to atleast stand a chance against armored units such as Stalkers or Marauders.
The Merc Shop upgrade for firebats further increases attack and movement speed, when fully upgraded, the Firebat is essentially on permanent stimpacks, and can catch up to most mercs.
Formerly, the Merc upgrade increased range, but it was determined that this would actually be a crutch, since increasing range will decrease the possible splash damage done to nearby units.
The main counters to Firebats are Range Teched Marines, Stalker Lancer, Maraiders, and Air. Basically anything that can out-range the Firebat and has greater or equal movement speed is a threat, since skilled players would likely kite the Firebat into submission.