This is an article about liquid. For a planet called "Lava", see Magma.
Lava is a very dangerous liquid. You will take a lot of damage if you step in it (30 damage immediately, then 35, 40, 45, etc. if you keep standing in it). Your crew takes less damage from it (5, then 10, then 15, etc.). Potential damage is unlimited and can eventually kill a Punchy.
Lava exists in small puddles/lakes at the bottom of most planets, including the starting Garden planet. It can be centrifuged for early Tungsten Ore or used as fuel for Hydraulic Dynamo (either directly or after being processed into better fuels like Core Fragment or Volatile Powder).
Countermeasures
Thermal Shell EPP provides immunity to lava, allowing you to swim in it. Having 100% resistance to Fire will also make you immune.
Lava oceans
Many planets (including the starting Garden planet) have a core ocean of infinite Lava. It wasn't minable in vanilla Starbound, but can be mined in FU.
There is also obtainable infinite Lava on Magma and Dark Magma planets (which have a surface-layer ocean of it).
A popular tier 1 factory is to use a pump to obtain the Lava (from the core of the Garden planet), then move it into a centrifuge with an Item Transference Device, while powering the centrifuge with a Hydraulic Dynamo. This produces many useful materials.