Candleberries can be found in swamps. They may exclusively appear in one of the swamp types (the greenish-blue type with Willow Trees but no foliage) [Verify].
If you happen across one, and have the foraging skill, you can harvest it. There is no known way to purposely produce Candleberries, so they can only be found by chance and by increasing exploration and perception skills. The lowest reported Perception * Exploration score to spot Candleberries has been 160 (16 EXP, 10 PER).
The only product that utilizes Candleberries is Candleberry Wax.