Lightning rod is a block\item. It has certain radius of protection (lets say 10 blocks).
You place it on the roof (or on the ground, anywhere you want), and if lightning is going to hit in some blcok within that radius, it will hit the lightning rod, causing no harm.
Good way to protect your wooden house, or whole farm\village (place multiple lightning roods).
It would be cool to collect electricity from lightning for crafting some new weapons, like improved TNT block with extended explosion radius, or "shok arrows". Or new type of lanterns.