This brightly coloured species belongs to a large group of very similar species best told by a combination of pigments, spore size and anamorph. They are probably more common in relatively arid areas compared to humid tropics.
Unlike species of Xylaria most Hypoxylon species have pigments that can be dissolved in fx KOH (scrape some surface off onto blotting paper and add a drop of KOH 10%). The stromata are flat, irregularly pulvinate to subglobose but never uprigth and the inner parts are mostly dark, without zonation. The spores tend to have more or less straight germ slits on the more curved side of the spores. In KOH the outer spore walls loosen in many species, and this wall (and even the inner) may have a spiral (or pitted) ornamentation.
Anamorphs mostly in the form genus Nodulisporium and normally freely forming on substrate on over surface of young stromata.
Important references: Dennis (1963), Ju & Rogers (1996) - listed at the Xylariales page.