An Yggdrassil Sapling can be used as a sword with the strength of an Enchanted Wooden Sword, but the main use of an Yggdrassil Sapling is when they're planted. That way, it spawns an Yggdrassil, a World Tree, with a trunk one chunk wide, the highest branches three times as high as the world height and roots reaching so far down beneath the Bedrock layer the tips are burned off by lava in the Nether. You don't need Bonemeal to generate an Yggdrassil, just plant it.
A Guy on the Internet won a Yggdrassil Sapling when he won the THaB Chapter 2 Title Voting Prizes. The next "surprize will be:TBA