I was chopping wood, trying to figure out it's purpose, but Hod never showed up at the station. Then, a little while later, I noticed a body washed ashore and sure enough it was Hod. Was this supposed to happen? If it was a glitch, will I need him for anything?

Isn't it obvious...? You need Hod alive to buy your firewood. No point woodcutting anymore now unless there's someone else you can sell firewood to.

I never really got to know him. I saw him once in his house the first night. I guess I should just check UESP to see if I have to deem this as gamebreaking or if I can just get the Hod experience with my next character.

Can't we sell to Hert, the rival of Hod?

It all makes sense!

Hert murdered Hod on the shoreline and tossed his body in the water.

And then Hert's mum comes home, "Hert! I made you some fresh stew, using fresh clean water from the river"... Hert proceeds to drink all of it knowing it probably contains Hod's waste, blood, and ewww don't even want to guess.