Bone Meal

Bone Meal is a material derived from the bones of vanquished Skeletons and used as a dye or fertilizer.

Uses
Like all dyes, bone meal can be applied directly to sheep to color them white. This is the only direct use of bone meal as a dye since it cannot be used to change colored wool blocks back into white wool at a crafting table. It can also be combined with other dyes to produce new colors:

Fertilizer
When using Bone Meal as fertilizer, there is always a chance of failure. In that case, the procedure must be repeated.
 * Crops: When applied to planted wheat, one bone meal is consumed and the crop grows instantly, ready to be harvested.
 * Saplings: When applied, one bone meal is consumed and the sapling grows instantly into a tree, provided it has enough space.
 * Grass: When applied to a grass block, one bone meal is consumed and tall grass, and occasionally flowers, forms around and on the grass block.
 * Trees with little (but still enough) room to grow may consume the bonemeal with no effect, but if the player gives the tree multiple pieces of bonemeal the tree will grow eventually. Care must be taken when growing trees as the player does not block tree growth and new leaves or wood blocks may cause suffocation if they grow into the block containing the player's head.
 * This effect does not work on cacti, sugar cane, or mushrooms.

Trivia

 * Bone meal's fertilizing properties make it ideal for growing large quantities of trees or wheat in tight spaces very quickly. A single bone's worth of bone meal can generate enough wheat for one bread or cake
 * Using bone meal to fertilize, harvest and replant Seeds is a fast way of creating a large number of seeds at the expense of bone meal instead of harvesting tall grass. This method also produces wheat and can be used to replace traditional farming methods.
 * As of Beta SMP version 1.3, there is a bug with Bone Meal so that it will have a 100% chance of succeeding on the first try when used on trees and crops. This can be used to quickly create huge crops and trees without the need for much Bone meal.
 * One bone can be crafted to 3 bone meal which means you can get 0-6 bone meal from a skeleton.
 * There is a crafting recipe that uses white wool and bone meal. It is useless, however, because it outputs white wool, thus wasting bone meal.
 * Grass planted with bone meal in an already populous area of tall grass can force grass to appear up to 5 blocks away from where you originally used it.