Gandalf's Staff appears to be a natural piece of wood but the crown
of the shaft holds something supernatural.  Within the crown, the wood has brown around a hollow, lattice shaped bulb.  The lattice is vaguely Elvin in design, and holds a great power.  At Gandalf's command, he can cause the crown to illuminate and light his way at night, or to spark blue flame to ignite fire. 

The staff is also imbued with a great strength allowing Gandalf to shatter stone with one strike.