Onion is the widest-cultivated species of the the genus Allium (yes, this the same genus as garlic! They’re very closely related). Onions are cultivated around the world because of their diversity and unique flavor. Historically, they have been used for at least 5000 years (but those were probably wild rather than cultivated). Since onions are so easily grown and then stored, they were a staple food in their native lands for many years; one example is that workers who built the Egyptian pyramids seem to have lived off of stipends of radishes and onions.
To make powdered or granulated onion, the onion bulbs are dried by heating so that the moisture from the plant is removed (to about 6.5%). Then, the dehydrated onion is further chopped until the desired particle size is achieved. So, this is a process that can be totally natural, and onion powder doesn’t need to have any added preservatives or anti-caking agents! Make sure to avoid buying onion powder with any ingredients other than, well: onion powder.
Granulated onion misses out on a lot of the exciting properties of fresh onion, but you don’t need to compromise the quality or flavor! I get all the spices I can from Primal Palate.