The text instructs us to leave the avenging to God who will distribute justice as He sees fit.
Romans 12:18-20 KJV If it be possible, as much as lieth in you, live peaceably with all men. (19) Dearly beloved, avenge not yourselves, but rather give place unto wrath: for it is written, Vengeance is mine; I will repay, saith the Lord. (20) Therefore if thine enemy hunger, feed him; if he thirst, give him drink: for in so doing thou shalt heap coals of fire on his head.
We are to live peaceably with all men as much as possible. We are not to avenge ourselves. If someone trespasses against us, we are not to seek to exact vengeance upon them ourselves by "being mean" to them. For example, if a person keys your car, you are not to decide to key their car in return. (Note, this has nothing to do with seeking remedy at law when necessary, for example calling the cops to investigate the burgling of your home.)
Instead of avenging ourselves, we are "to give place to wrath". This does not say we are to "let our wrath dissolve away", rather it is saying we are to make room and provide a space for wrath. The wrath being spoken of here is the Divine Wrath or punishment for injustice. We know this because the reason we are to give place to wrath is explicitly stated in the very next words, "for vengeance is mine, saith the LORD, I will repay."
Therefore, that is to say,
because God takes it upon Himself to avenge His elect of the injustices done to them by their enemies, we are to treat our enemies as we would anyone. We are to do good, in obedience to the commandment to love our neighbour as ourself. In doing this it is said we will "heap coals of fire upon" our enemies' heads.
Many think that this means we will cause them to be embarrassed for their ill treatment of us when they see our benevolence towards them. Although that sometimes does happen, it is not the usual response, as both the Bible, history, and our personal experiences can well attest. Rather, it is saying by our doing good to others, loving our neighbour as ourselves, even those who have become our personal enemies by trespassing against us, we acquit ourselves of wrong doing, and provide the necessary authorising for God's vengeance to remedy injustice on our behalf.
The "heaping of coals of fire upon the head" is an allusion to the wrath and judgment of God:
Psalms 140:9-10 KJV As for the head of those that compass me about, let the mischief of their own lips cover them. (10) Let burning coals fall upon them: let them be cast into the fire; into deep pits, that they rise not up again.
Psalms 11:5-7 KJV The LORD trieth the righteous: but the wicked and him that loveth violence his soul hateth. (6) Upon the wicked he shall rain snares, fire and brimstone, and an horrible tempest: this shall be the portion of their cup. (7) For the righteous LORD loveth righteousness; his countenance doth behold the upright.
Divine vengeance does not usually work on behalf of those who are not upright. So if you yourself are walking in disobedience, you have no expectation that God will take it upon himself to avenge injustices done to you and right the wrongs. Rather, God tries the righteous, His countenance beholds the upright, and He punishes those who do His chosen ones harm.
It should also be noted that Divine Judgment or wrath upon the enemies does not always mean their total destruction, or some calamity happening to them. It could very well mean they are brought to a place of repentance. And if your attitude is not one that is willing to feed your enemy when he is hungry, or give him drink when he is thirsty, but rather looking to bust his chops, then you probably won't be willing to receive him if he repents. You'll still be nursing a grudge.
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