Obsidian is a very hard substance formed when lava meets water. You need it to build a Nether Portal or an enchantment table. It's also useful if you want to build something that's completely creeper-proof!
Obsidian can be mined with a diamond pickaxe. It takes 8 seconds for each block &emdash; much longer than any other substance, but be thankful because in pre-release versions of the game it took 15s!
Obsidian is most commonly found deep underground where water meets lava, ofen in the form of a single layer of obsidian on top of a lava lake.
You can make obsidian by emptying a bucket of wateror diverting a stream so that it flows onto a lava lake.
Because obsidian is often found in a single layer on top of a lava lake, when you mine a block the obsidian will often fall into the lava and be lost. Often the player falls in after it and dies.
To prevent this, pour a bucket of water so that it flows over the surface of the obsidian you are mining. When you mine the block, the lava below will instantly be turned to obsidian, saving both the player and the mined obsidian. Yay!
Forming Obsidian structures in place
Because obsidian is formed when you pour water over lava, it is possible to build obsidian structures by placing buckets of lava in the position you want the obsidian, then pouring water over. This is useful if you want to build with obsidian, but don't have any diamonds to make a diamond pickaxe. A Nether Portal could be constructed with 10 buckets of lava and 1 bucket of water.
A sneaky way to turn Redstone into Obsidian
There is a way to turn as much redstone as you want into obsidian, using only one bucket of lava. It seems to be an unintended feature of the game, and as such may be removed. But for now it works.
If you are sufficiently ingenious, you could go through this process to generate obsidian blocks in the place you want them, so you don't need to mine the obsidian with a diamonnd pickaxe.
For instance, to use this technique to build a Nether Portal, follow the steps above and then:
Place the lava at the end of the "U" as before; this time you will make 2 obsidian blocks with dirt between them.
Repeat this process 2 more times.