Lava Shards are rare items found only in the End. Their rarity adds to their high use, making them as valuable as Diamonds. They are one of the four items needed in order to craft an Inferno Staff. They are found in a 1/20 chance when obsidian is mined in the End; but it has to be from water + lava source obsidian, not the obsidian pillars.
Lava Shards, when right-clicked, dump about 3x the amout of a single lava bucket's worth of, well, lava. Also, they have infinite durability and can be traded with villagers to get high quality tools.