Gunpowder is a barrel containing a black powder. You can find it in the Armaments Section of inventory. It has multiple purposes, including decoration and weapons crafting. Gunpowder takes up the usual one square block and has zero collision.
It looks very similar to, but should not be confused with, pitch.
How to Obtain
You can loot from dungeons, chests, sacks, and other containers, mine it from dungeons, trade for it in a market world, or craft it.
How to Use
Gunpowder is mainly used for making bombs of all kinds.
For the first couple years of the game, gunpowder was the only item without collision that would block rain.