TNT is not very useful in combat. Detonating it would kill both you and the enemy. It can be used as a mining method, detonating deep into a mine.
TNT may currently be obtained only from the Ghost Miner and the Blood Fire Golem.
When interacted with, there will be a button that will the player to detonate the TNT. It can may detonated in the inventory to obtain various kinds of rare loot, such as rare Geodes or ores such as Promethium Ore, Titanium Ore and etc.
Detonating the TNT will also yield the player 20 000 Mining XP.
Mega TNT 
Mega tnt (or large tnt) can be dropped by the Blood Fire Golem after unlocking the combat perk Boom Again. It has a 5% drop rate with the active perk.
Detonating this TNT will yield 50,000+ mining XP, T1-T4 geodes, any type of ore (including dragon), and any type of smelted bar.