I know that alchemist isn’t meant to do damage, but I’m curious about combustion. How does it work? Is it utter garbage? Something else? Hidden mechanics?
I’m interested on it too 
It explodes any items you can pick up (in the case of no items, silver can be used up to explode right in front of you with an attribute).
It is indeed garbage, so I don’t recommend getting it.
So it requires items to be already on the ground? Can’t use items from inventory then?
Yep, that is correct.
How many hits does it do? Is it single target or AoE?
Actually, if there are more than one item currently on the ground, does it explode them all? If so do they all deal damage in a separate hit?
theres a passive which allows to use it without items on the ground
hows that?
it deals about 4 times of the dmg of a fireball hit, that would make a 8-16k dmg hit (in theory)
It dealt only 1 hit when I used it. I didn’t test with multiple items as it’s already too hard to use anyway.
well I was thinking if it can explode multiple items at once, there might be some synergy with digging