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Blaze Rods are items which are dropped by Blazes, mobs which are found in or near Nether Fortresses and which appear to have these rods as body parts. They are essential for brewing potions, and are commonly used for locating Strongholds.
When killed by a player or by a machine that imitates a player's action, a Blaze may drop a Blaze Rod. Blazes which are killed by other causes will not drop any Blaze Rods. A fully automated farm may be possible using Minefactory's Grinder", a Turtle, or a Golem. The mechanic here is the same as for Experience, i.e. the player does need to deliver the final blow.