Slime

The Slime is the fifth hostile mob, and was added on July 23, 2010 (Seecret Friday 6! Alpha 1.0.11). They appear as green semi-transparent cubes. Slimes come in four official sizes: huge, big, normal, and small. While slimes that are normal or larger will make a wet slapping noise, small slimes will make the same noise made when the player walks on stone. They are the first hostile mob that can spawn in both light and dark areas. These creatures are only naturally found deep underground in the bottom 16 layers of the map. They usually spawn in large, cavernous spaces or in open mines. This is partially caused by the fact that a large space is needed for them to spawn.

Killing a slime of any size but the smallest will cause it to break into four smaller slimes, unless it is killed with a weapon that deals more than damage. Slimes do not grow larger over time. The small slimes cannot directly do damage, but they can easily push the player into other hazards such as lava. The smallest variation of slime are often kept as pets by players. This is because they do not do any damage and follow the player around harmlessly.

Slimes of any size will begin to take burn damage upon touching lava and die moments later without splitting into smaller slimes. Slimes cannot swim; therefore, they will drown if they are completely submerged in water and will be unable to jump out. Slimes have the ability to climb ladders, enabling them to follow the player out of caverns.

Killing a small slime yields 0-2 units of Slimeballs, which currently serve no purpose whatsoever.

Drops
Beta:
 * 0-2 units of Slimeballs (Small slimes only)

Notch also said while he was streaming the he might use slimeballs for "sticking stuff."

History
When slimes were first introduced, they spawned at a very high rate. This caused Notch to limit slime spawning. However, it appears that he incorrectly calculated slime spawning, leading slimes to spawn only in strange locations. This eventually caused Notch to completely disable natural slime spawning. That caused many players to become angry. Later, Notch confirmed in Coestar's livestream that slimes have been returned as of Beta 1.2_01, but are very rare. As of Beta 1.3, Slimes spawn have been increased once again, appearing much more commonly than in 1.2_01.

Trivia

 * A good way to farm slimes or slimeballs is to make a big room (3 or 4 blocks high) near or on bedrock and that cover it with torches. If the room is big enough, slimes will spawn.
 * Even as of Beta 1.3, Slimes are able to spawn on peaceful, and even on Peaceful, Slimes will attack players without any provocation.
 * In Beta 1.3, slimes in multiplayer that split would only be visible to the player that caused them to split. Because of this, they would not take any damage. Because they were located on the client's side, the player could only remove the slimes by exiting and re-entering the server. This has been remedied as of Beta 1.4.
 * Slimeballs can be farmed by punching Slimes to death instead of using a tool like a sword or an axe. This guarantees they will split into four more slimes, instead of merely dying. This means: 1 Huge Slime = 4 Big slimes = 16 normal slimes = 64 small slimes = 0-128 drops.
 * If a slime dies from fall damage, it will not split.
 * Slimes may have been inspired by a number of classic gaming monsters: Their shape and size resemble that of Gelatinous Cubes from Dungeons & Dragons, and their splitting behavior resembles that of Zols from The Legend of Zelda and Puddings from Nethack. The name and the large, cartoonish face may be an homage to Yuji Horii's iconic Slimes from the Dragon Quest series.
 * When slimes damage a player, they will make a splatting sound, far different to the sounds heard from their leaping.
 * Slimes can glitch in multiplayer and cause models to be incorrect. For instance, a small slime could actually be a big slime but not show it correctly.
 * Slimes seem to be broken in multiplayer, killing a small slime can spawn 4 big slimes and so on so forth. A slime can jump in lava and start spawning more from each death. This can lag a server and it is advised to either keep away from slimes or drop them into a hole and seal it up.