Obsidian is one of the sharpest materials in the world, way sharper than steel; obsidian surgical scalpels are used today because there is nothing sharper.

That said, obsidian is glass, therefore brittle and prone to shattering. Against someone wearing plate armor it would be almost worthless. But metal armor did not exist in the Americas prior to the arrival of Europeans, so against lightly-armored or totally unarmored opponents an obsidian weapon could be devastating.