A boulder is a map tile that occurs randomly across the surface of the world (often found on soil or sand). Boulders represent fragments of various stone types. They can impede the movement of wagons and get in the way of construction projects on land but can be walked over by dwarves and other creatures. To remove a boulder, access the esignations menu and mooth stone, click on the stone and an engraver should come along to turn the boulder into a smooth rock floor. The resulting floor is the material of the boulder rather than the apparent surrounding material of the ground that the boulder was on.
If you wish to remove a boulder without creating a smoothed tile in its place, there is another way. Simply designate a wall to be constructed on top of the boulder. After it has been constructed, designate it to be removed. Due to a bug, when a dwarf removes the wall, the floor will be replaced by the dominant floor tile of the area (usually soil).