Sulfur is dropped by its ore that can be found in Middle-earth, or can also be bought by Dwarf miners and Blue Mountains miners, similar to nitre.
When combined with nitre and charcoal (can't be coal) on a vanilla crafting table, it creates two gunpowder, being the only way to obtain gunpowder within Middle-earth. 5 gunpowder are needed to craft Orc bombs.
Sulfur can also be used to craft sulfur matches, which are made out of one sulfur and one stick. Sulfur matches are used to light fire, like flint and steel. The match is used up in this process.