Dynamite comes in sticks with fuses that stick out of them. Once lit, they are tossed at a hostile and will damage or kill them. It only requires 1 Strength to use this very lightweight explosive weapon. However, it has a rather small blast radius for an explosive, which reduces its effectiveness against groups of enemies, while at the same time making it less of a friendly fire hazard.
Alternatively, one may place it on the ground by dropping it and then detonate it by gun fire or another explosive. Unlit dynamite sticks detonated by external means deal 75 explosion damage, unaffected by player's skill or perks. However, bear in mind that a kill by this explosion will not yield experience, but is another effective way to kill someone without changing anyone's opinion on your character, or gaining/losing Karma. Dropping multiple sticks as a single pack is not a good idea, as the resulting explosion will only yield the effect of a single stick. Instead, one should take the time to drop dynamite sticks individually - that way the explosion damage from each stick would add up together.
Contrary, when an ignited (thrown) dynamite is shot the resulting explosion deals no damage.
It has the words "inert" on both sides of the stick, near the fuse, also it has two American flags on each side of the stick as well as the word "dynamite" on each side. The American flags look like the American flag of our world, as opposed to the different design used in the Fallout universe. Whether this is a design oversight or this is used to show just how old these dynamite sticks are is unknown.
For the quest Ghost Town Gunfight, Easy Pete can be convinced to hand some dynamite over to the player character if they can prove they can handle the sticks without killing everyone. This requires a skill of 25 in Explosives.
Dynamite can be obtained by killing Powder Gangers such as the ones outside of the players' starting area or by storming their base at the NCR Correctional Facility.
Dynamite can be obtained every 3 days from Eddie of the Powder Gangers if you're liked enough by them.
Some convicts carry dynamite, although they aren't a very reliable source.
Decanus Severus will give you dynamite for 3 NCR dog tags if asked by Aurelius of Phoenix.
The top of each stick of dynamite is marked "INERT", suggesting it is not in working condition or is a prop or test object. (Actually, it means that explosive is stable enough to be handled. Inert explosives require external source of detonation to explode. Like a lit fuse or detonator.)
pc Somewhere along the way you may pick up a dynamite stick with 0 durability. This was always wind up being the very last stick of dynamite you use in your stack. If you attempt to use this last stick, the game will crash. Placing the dynamite in a storage container and relooting it fixes the problem. [verified]
pc If you get knocked down when holding a dynamite, the dynamite may fly away. When you then return to 1st persion view the dynamite model may have disappeared from your hand (still looks like you are holding an invisible dynamite), you can still throw that dynamite and the next one you'll pick up will be visible. [verified]
xbox360 Damage is not increased by Demolitions Expert perk. Confirmed for the Long-Fuse variant. Appears to be the case for all dynamite-based weapons (i.e. powder charge, etc.), though this has not been thoroughly tested. (Fixed with Patch 1.4) [verified]
ps3 When igniting the dynamite, the screen will suddenly move upwards by a small amount jerkily and offset your aim. This however does not affect the trajectory of your current throw and may cause some confusion as to where your dynamite is going to land, a fix is unknown at this time. [verified]
pc If there are 2 enemies engaging the courier in combat, selecting 1 of the 2 targets in V.A.T.S with the dynamite equipped, the unselected enemy(s) will move normally and as if not in V.A.T.S, even though the throwing animation and target is in slow-motion. [verified]
ps3 If you throw five or more dynamite very quickly, it will crash the game. [verified]