The wire used here is not the typical copper wire. It is nichrome wire which has much higher resistivity compared to copper. Hence, for the same length, the resistance of the nichrome wire has higher resistance.
When the current flows through the nichrome wire, energy is transferred electically to internal (thermal) energy of the nichrome wire. The wire becomes hot so that it can cut the styrofoam with ease. This is the same concept for heating appliances like kettle etc.
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