The godsword shard 1 is a drop from the bosses and sub-bosses in the God Wars Dungeon. It is used to make a Godsword, by using it on an anvil with Godsword shard 2 and 3, creating the Godsword blade. Doing this gives 100 Smithing experience and requires level 80 Smithing.
To then make the Godsword blade usable, a hilt must be attached. Hilts can be removed after being attached. Attaching and removing hilts does not have a Smithing level requirement. Changing a hilt only changes the Special attack of the Godsword – its bonuses remain the same, regardless of hilt.