The nodules are concretions formed in sediment by the accumulation of limestone (calcium carbonate) within mud on the floor of the ancient sea which covered this part of Queensland about 100 million years ago. They are the result of chemical processes, not of water erosion.
When the mud was of uniform composition and texture, nodules formed spherical shapes. In sediment not of uniform composition and texture, or in the presence of other chemicals, a variety of shapes formed. Sometimes these odd shapes are mistaken for fossils.
The nodules are not themselves fossils but they may contain fossils, especially seashells (see lower left photograph), forming the nucleus around which carbonate accumulated to form the nodule. Sometimes wood and bone are found at the centre of concretions.
¶ The text above is from display information at Kronosaurus Korner, Richmond, and at Stonehouse Museum, Boulia.