Obsidian Rods are crafting materials that can be made in a Processor.
Like with everything else crafted in the Processor no recipes have to be unlocked for this.
8 Obsidian Rods can be processed from 1 Obsidian(Bar) that is made from Obsidian Ore in a Forge Or 4 Obsidian Rods can also be processed from 1 Obsidian Slab each.
Obsidian Rods are used for different crafting recipes, like for Iron Swords, Diamond Swords, Iron armor, Super Extractors, Gas Lamps or Excavators, Obsidian furniture and a number of building blocks too (as of R26 in December 2015)..
Obsidian Rods are no blocks, so they cannot be put into the quick-bar, cannot be placed into the world and cannot be displayed on Wall Shelves, in Wood Planters nor in Flower Pots.