The Obelisk was built by the Pagans of Blackrock at the Guardian's orders, to "create" the Titans to protect them from the "Destroyer." In reality, its purpose was to strengthen the Guardian's four elemental lackeys. After its creation, the Guardian ordered the Titans to travel through the Black Gate into Pagan and destroyed the gate, erasing all evidence of his involvement.
It was the Avatar who recovered the fragments and pulled the Titans' power into them, recreating the Obelisk in the Ethereal Void in order to leave Pagan. The Obelisk led the Avatar to the Hallway of Worlds, which allowed the hero's return to Britannia.