With Any Axe or Any Pickaxe equipped right-click an Obsidian Boulder and select "Chip" to receive 60x Obsidian. Alternatively an Obsidian Boulder can be crushed in a Stamp Mill or blown up with a Lit Boomstick to receive Obsidian. Select Any Stone and right-click it onto a piece of Obsidian to receive either Obsidian Fragments or an Obsidian Arrowhead.