It's just a LVL3 bonus exercise, so that is correct you will never see it in a course except as a bonus.
The object can be anything. A lot of people use plastic/wooden dumbells because that's what their dog has been trained to do a formal retrieve with, but you can use anything. We started doing level 3 at our second trial and I hadn't really, so much, um, read the rules yet

and the retrieve was the bonus...not only did I not have a dumbell, I didn't have anything...ended up using a toy Kim had won earlier in the day as a placement prize, lol.
Basically, you hand the object to the judge at the start of the main course. You do the course, proceed past the finish line to the bonus side, do an about turn and sit. Between the time when you passed the finish line and turned around, the judge should have laid your object on the ground near the finish line. You send your dog and he should go directly out, briskly, pick up the object, and return to you and sit in front. He should continue holding the object in front until the the judge gives you the okay and you take the object, then finish to heel position.
Does that help?