How do you heat chili on a charcoal grill?

Ideally you need a grill with a lid.

Put the coals in one half of the grill pan and the food on the rack over the empty half. Instead put a pan of water on the rack above the coals. The lid holds the heat, smoke and steam in, which cooks the meat - - this method is basically smoking.

It should still be possible without the lid. Put the meat in the middle of the grill rack and the coals on either side, but not underneath - the basic idea is that you don't put the food over the coals - that would be direct heat i.e. grilling.

Hope this makes sense.