Many fanboys cried out in joy when it was announced that the Energy Sword would be a wieldable weapon in Halo 2. The sword appeared in Halo: Combat Evolved, but only as something that the Covenant used to kill you. Now, it's your turn! (Imagine ominous music and hit the jump.)
The Energy Sword is sometimes referred to as the Plasma Sword, due to the fact that it's primary made of plasma. The material is held into blade-form by a magnetic-field generator built into the weapon's handle. The hot blade can cut most technology and armor in two with a single swipe, making it a devastatingly effective weapon.
Despite being a melee weapon, like the Gravity Hammer, the Energy Sword uses battery power. However, simply striking an opponent doesn't consume energy, only killing one does. Therefore, you can keep the Energy Sword forever if you only use it to weaken an opponent and then use another weapon to finish them off.
In Halo 3 multiplayer, Energy Swords carry enough battery power to eliminate 10 player before running out.
Since the sword is stricly a close-quarters weapon, it's important to keep it sheathed until you're ready to use it. Running around with your sword out will alert other players and cause them to keep their distance from you, as well as make you a high priority target for snipers. It's better to keep it as your secondary weapon until you're close enough to strike.
In Halo: Combat Evolved, the sword had a fail safe switch that caused it to explode when an Elite dropped it, ensuring that Master Chief (or anyone else for that matter) couldn't wield it.
The Fable 2 collector's edition comes with an Energy Sword and Master Chief armor that your character can use. Check out the sword in-game.