Game of Thrones - Catspaw Maester's page
The Valyrians were familiar with dragonglass long before they came to Westeros. They called it "Zirtyl yierzyll", which translate[s] to "frozen fire" in Valyrian, and eastern texts tell of how their dragons would thaw the stone with dragonflame until it became molten and malleable. The Valyrians then used it to build their strange monuments and buildings without seams and joints of our modern crafters.
When Aegon the Conqueror forged his Seven Kingdoms, he and his descendants would often decorate their blades with dragonglass, feeling a kinship with the stone. They royal fashion for dragonglass ornamentation soon spread throughout the Seven Kingdoms to those wealthy enough to afford it. Hilts and pommels were and are the most common decoration, for dragonglass is too brittle to make a useful crossguard. Indeed, its very brittleness is what relegates it to the great houses and the most successful merchants.