How's it safe to line a wok with foil?

The melting point alone for aluminum foil is 1220F so, no, the foil will not catch fire in your oven or on your stove.

Weirdly, I have actually seen aluminium foil burst into flame on an induction hob. Which is not a wok. And no, I don't remember what I was trying to do at that time.

Sidestepping the question of whether metals can oxidise fast enough to burn, nothing too terrible should happen in the presence of water to any metal likely to be found in the kitchen. As long as there's steam, energy is being tapped away and your cookware and its linings are in little danger. Horrible things happen, after all, to pans that 'boil dry'. Frying, however, may require a different yardstick - and a first candidate would be the smoking oil.

Safe? Yes, though you might occasionally have to pick a small fragment of aluminium from your dinner.