Compared to say flint how difficult was obsidian to produce?

It was virtually identical, but found in different locations. Flint occurs naturally in sedimentary deposits, while obsidian is formed as a volcanic deposit. Both occur in Mesoamerica, although obsidian is more common there than it is elsewhere in North America. This is due to the fact that Mesoamerica is located at the intersection of the North American, Carribean, and Cocos tectonic plates. The mountains and plateaus of Guatemala and the Mexican highlands are formed by the subduction of the Cocos plate, and thus many are highly volcanic today, but most were highly volcanic at some point in the past. As a result, there are a wealth of obsidian sources.

Of course, obsidian was still located in specific places, and many of the larger or more unique obsidian sources became strategic resources which Mesoamerican cities and empires fought over. For example, the Pachuca obsidian source was famous throughout Mesoamerica because it was of reliably good quality and yet had a uniquely green hue. Green was a sacred color in Mesoamerica, being the color of life, and thus Pachuca was highly valued. During the Late Postclassic Period (specifically between 1428 and 1521), this obsidian source was controlled by the Aztec Empire. Their merchant guilds, the pochteca, spread the obsidian across the subcontinent as they established economic hegemony in many areas. Although notably, it does not appear in Michoacán because their rivals, the Tarascan Empire, banned the pochteca from crossing the border following the 1470s Aztec-Tarascan war. (Smart move on their part, the pochteca worked as spies.) Nevertheless, the Tarascans controlled two closely located obsidian sources, Zinapécuaro and Ucareo which were also immensely popular sources across central, western, and southern Mexico.

Obsidian technology, like all flaked stone technology, works by taking a core (beginning with a boulder of raw material) and removing pieces (called flakes) by percussion or pressure, beginning with primary flakes to remove the exterior, removing secondary flakes to get the shape you want, and removing tertiary flakes to polish the final shape into a tool. It's a process that requires a great deal of skill. It has to be taught to you, and you need to be able to understand complex geometry at least on an intuitive level. There is considerable skill involved and thus in sedentary societies that produced complex stone tools the work was usually performed by dedicated craftspeople.

People removed from the center of production, or did not control obsidian sources via economic or political means, often received hand-me-down obsidian cores that had already had pieces removed by other craftsmen (e.g., Hirth 2008, Latin American Antiquity 19:4). Many regions like the Maya Lowlands lacked obsidian altogether, and had to maintain distant contacts with highland cities to obtain obsidian. The Aztec pochteca merchants, as I already mentioned, profited enormously from this kind of trade. The important point here is that Obsidian had to be procured in very specific places, and communities that were close to or otherwise controlled obsidian sources tended to have obsidian in abundance, but those who were located further away or were denied access had little, and their craftsmen often had to make do with scraps.

How does their utility compare?

Obsidian is significantly sharper than flint, which has advantages and disadvantages. Some activities require very sharp cutting implements, some do not. It is also very brittle, even more so than other flaked stone tool materials like flint or chert. Activities that required hardness rather than sharpness used ground stone, those that required a mix of both were better off going with something like chert. But obsidian was extremely popular for things like shaving beards, cutting meat, hunting animals, and killing people.

Due to its extremely fragile nature, it was treated as a kind of disposable technology. As obsidian was the dominant tool making material in most of Mesoamerica, and because of the extremely high population density of many of Mesoamericas urban civilizations, many technologies developed to produce effective cutting implements while using as little material as possible.

This is the main reason why the prismatic blade became so popular in Mesoamerica. Blade technology is old, but it's popularity in Mesoamerica grew relatively late, and in some regions did not become popular until the Postclassic (900 AD to 1521). The technology works by preparing a core into a polyhedral cylinder shape and hammering off thin slices as blades. The blades can then be broken up into segments and either used as is (as they would do for shaving or fine cutting work), or set with adhesive into a wooden tool to create a larger cutting edge.

In this kind of technology, blades were disposable. A wooden tool with an obsidian edge will lose its edge quickly with use, but if you have access to an obsidian knapper, he's likely got tons of blades, all uniform in size, and you can just buy more and set them into the same tool.

Mesoamerican weaponry evolved to reflect this advantage as well. Spear points made of obsidian shatter easily, and unless you're right next to an obsidian source or have very reliable trade with somebody that does, replacing them is expensive. Mesoamericans thus invented a weapon called the Tepoztopilli which was a polearm with a very large wooden "spear point" head that was lined on the edges with prismatic obsidian blades. That way when the edge shattered, you could simply replace whatever blades were damaged without making a whole new weapon. Over time, variations with a longer, square shaped blade were produced that emphasized slashing rather than thrusting. These eventually became the macuahuitl, the favored weapon of the Aztecs and neighboring groups, which resembled a wooden sword with an obsidian edge. Ross Hassig's book War and Society in Ancient Mesoamerica discusses this at length.

Compared to steel was it easier to produce?

Yes, in a sense. In terms of skill, producing obsidian blades and producing iron and steel are both professional skills that have to be taught, but producing steel took much more time. Metal has to be smelted from ore, then cast or forged, then worked. Obsidian only has to be worked. The production is faster. Of course, this advantage is offset by the fact that metal, especially steel, is far more durable and does not need to be replaced as frequently.

Was it often worth the fragility?

I would say in the world of pre-Columbian Mesoamerica, yes. Obsidian was abundant, effective, and disposable. If it was not worth it, there were other resources that they could have used for producing tools. For example, west Mexico had been smelting copper alloys for many centuries and occasionally made utilitarian objects with them, but still preferred obsidian for cutting implements. Mesoamerican armies typically did not wear hard or heavy armor (it gets hot down there), and instead favored lighter armors of a more malleable texture (such as quilted cotton armor), and against that form of armor cutting power is more important than durability.

But I don't think it was worth the fragility in the world they entered into after the Europeans arrived. The conquistadors' metal armor was guaranteed to shatter any obsidian that struck it with sufficient force. Although I should note this did not prove as effective against other, non-shattering materials. The Aztec's atlatl darts tipped with fire-hardened wood were quite effective at punching through weak points in metal armor, and a slingstone doesn't have to break through the surface of your helmet to give you a concussion. Military technology is often heavily overstated in popular accounts of the conquest.

Nevertheless, many of the technologies that the Spanish brought with them from Europe necessitated the use of metal, not limited to obsidian-resistant armor. It is interesting to note that the Aztecs quickly broke apart Spanish weapons they captured and refashioned them into metal points for spears to use against the Spanish cavalry. In Michoacan, when European agricultural technology was introduced, indigenous copper smiths immediately began producing European-style agricultural tools using indigenous techniques of working copper and copper alloys like bronze. They clearly possessed the capacity to make such tools before contact, but they were not needed until European technologies were introduced which created a demand for them.

In the long run, obsidian was abandoned during the colonial period in favor of metal. And while it's easy to see this as a form of diffusion, with the European techniques of metallurgy imposed from the outside, it's important that in the very early colonial period indigenous people still retained a great deal of power and autonomy. Instead, indigenous people chose to adopt metal tools in favor of obsidian ones because they proved to be more effective in a world where other people were using metal tools.