First of all, I must recommend to the OP (and anyone else whose interest is piqued) the following article:
It’s an outstanding, accessible discussion of what makes a knife sharp and why it’s hard to make sharp knives that last. It also gets the technical/metallurgical details right to an impressive degree.
[Emphasis added]
This is absolutely nitpicking, but diamond and obsidian don’t get sharper than steel because they’re harder or stronger–their hardness and strength make them useable at all.
We should be careful to differentiate between a blade’s sharpness and the strength and hardness of the underlying material. Diamond and obsidian blades can be sharper than steel, but not because they’re harder or stronger: it’s because they have a finer and narrower edge.
For example, you can make similarly sharp knives out of both glass and diamond. The diamond blade is harder and stronger; it will stay sharp much longer than a glass blade. But it’s not necessarily much sharper than a new glass blade.
(I imagine you’re quite aware of this, Shodan; it doesn’t invalidate any of your points).
One reason obsidian can be made sharp more easily than steel is that obsidian has no crystal structure–it’s volcanic glass–and steel does.[sup]1[/sup] While some martensitic inclusions are smaller (and much harder) than other grains in the same material, they’re both a lot bigger than the molecules that represent the lower limit of a glass or obsidian blade. It’s possible to grind an edge that’s finer than the width of the grains, but conventional knife-sharpening reaches its limit at this point.
With glasses like obsidian, you can knap a sharper edge than you could grind into a metal blade.
Diamonds also have a crystal structure, but I’m not sure what its size is relative to that of, say, a nice heat-treated steel. Diamonds are exceedingly hard and often enormously strong, so a diamond blade would feel very sharp if you could use one to slice a tomato. But they’re so small (a few millimeters long) and so expensive (several thousand dollars) that no one is making dinner with these things.
[sup]1[/sup] There’s such a thing as metallic glass; it’s made by cooling liquid metal very quickly. Yes, you can buy a knife made from a metallic glass, but they’re not as much of a materials slam dunk as one might imagine.