Igneous Rock is one of the natural rocks that the Lava layer is made of.
This rock/block can only be mined if an Iron Mining Cell or better (Diamond, Lumite) is equipped. Taking/mining Igneous Rock is one of the requirements to unlock the crafting recipe for Igneous Walls.
Igneous Rock is a crafting ingredient required for Stacked Hardened Lava Walls (Store-bought building blocks), Igneous Block Walls (Store-bought building blocks), Smooth Sandstone (a rare Recipe from Treasure Chests), Hardened Lava Wall (another rare Recipe from Treasure Chests), Igneous Wall (unlocked by mining Igneous Rock) and Igneous Roof (unlocked by crafting/taking Igneous Wall).
In cool environments, Hardened Lava will cool down into Igneous Rock by itself (again). Hardened Lava will also change into Igneous Rock when Freeze Bombs are thrown at it or it is chilled down with cold blocks like Ice or Snow. Often even Water is sufficient to cool Hardened Lava, depending on the surrounding temperature.
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Igneous rock cannot, and does not, in any way, turn into Obsidian, even though Obsidian is technically a form of igneous rock in the real world.