That happened because the chakra was so intense and heavy it literally burned his skin. The same thing happened when he was fighting the Third Raikage and tried to use the Bijuu Dama Rasengan. It's really quite hard to use the Kyuubi's chakra effectively.
So…Obito has Wood Release, as half of his body is made from Hashi cells…so why did he take that hit and not just create a giant wall of wood in front of Naruto and Sasuke…?