- "The Maesters call it "obsidian"."
- ―Samwell Tarly
Dragonglass is a common name in Westeros for the substance known as obsidian, a form of volcanic glass. They are notable for being thus far seen to be the only substance capable of killing White Walkers.
Grenn, Dolorous Edd, and Samwell Tarly find a cache of dragonglass spear heads buried in the snow on the Fist of the First Men. Sam identifies the material, but is unsure why it would have been left on the Fist by a ranger of the Night's Watch. Edd suggests that whoever it was, they wanted someone else to find the weapons.
After escaping Craster's Keep with Gilly, Sam shows her a piece of the dragonglass he had found. She asks what it does, and Sam responds that he isn't sure it does anything. He does remark how beautiful it is however. Sam later uses his dagger to slay a White Walker that was after Gilly's baby. When Sam stabs the White Walker in the shoulder, it turns to ice and shatters.
In the books
In the A Song of Ice and Fire novels, dragonglass is found in quantity on Dragonstone and in the ruins of Valyria, where it was used to make different kinds of ornaments, including candles. It is also an export from Asshai. According to legend, the Children of the Forest also made use of the substance. It is also discovered that weapons made of dragonglass are the only thing that can harm or kill White Walkers, and according to legend, the Children of the Forest would provide the Night's Watch with weapons made of dragonglass specifically for that purpose.
Dragonglass is sharper than steel, but also more brittle. For this reason it does not make good swords because they might shatter, but smaller daggers are more sturdy and therefore more common. They are also very effective as arrowheads.
In the books, it was Jon Snow who found the buried bundle. In it there were a dozen knives, leaf-shaped spearheads, numerous arrowheads, and a broken warhorn.
Apart from its effectiveness against ice-bound evils and its use in magic, dragonglass is identical to real-world obsidian, down to it's volcanic origins, its overall functional limitations, and its use as a reliable cutting tool by peoples who had yet to develop metallurgy.
- Dragonglass at A Wiki of Ice and Fire (major spoilers from the books)