Water

Water is a fluid that can only be placed by the player when using a bucket (unless hacked in the player's inventory). On newly generated maps, water is common at ocean level also known as sea level (elevation 62) in the form of lakes. It also appears in pools, springs underground and lakes above ground. It can also be found in Village Wells, Desert Wells and sometimes as Springs / Waterfalls from a cliffside.

Water cannot be found in The Nether and water from a bucket will evaporate as soon as it touches anything in there (cauldrons exempted). Water "blocks" obtained through inventory editing can still be placed in The Nether.

Behavior
Water reduces your movement speed while traveling through it. It is possible to overcome this and travel quickly across the surface of large bodies of water by using a boat. Keep in mind boats aren't used in Pocket Edition!

Light


Water reduces light by 3 for every block, in addition to normal dispersion. This means that the deeper you are in water, the darker it will be.

There are two ways of increasing your ability to see under water. The first is by equipping a helmet with the Respiration enchantment.

The second is by drinking a Potion of Night Vision. This option is likely an unintended use of the potion, and may be patched in a future release.

Spreading


Water spreads across surfaces in a slightly more realistic way but cannot spread on top of another Water block. This allows the creation of waterfalls in these modes. The player can pick up Water blocks from sources such as an ocean or a lake by use of a Bucket. When placed again, the Water creates a spring which generates flowing or falling water. When a spring is destroyed, all flowing water created from it will slowly dry up. If there is a hole six blocks or fewer from the point of origin, the water will tend to flow in that direction. Source blocks and falling water that has landed on a solid block will always flow in at least one direction unless restricted. Water will travel a distance of 8 tiles with the counter resetting to 0 every time it lands on a lower level. If a block next to a water source block is destroyed, the water will immediately flow in that direction unless there was a block beneath the destroyed block.

Management
Placing a block in the same space as water will replace the water. Entire lakes can be filled this way. Some Decorations, Piston's head, Ladders and Sugar Cane will also displace water. In survival mode, blocks take a longer time to break while the player is underwater.

Using a redstone wire, a one-block water flow can be redirected by supplying power to the source block, which will cause it to reset the flow towards the now-nearest terrain depression. The flow can then be put back so that it is not redirected until a block change occurs again, as seen in this video. This re-calculation is made because redstone wire when toggled changes the block from redstone(on), to redstone(off). whenever a block updates on any side of water, the water re-calculates where to flow, but does not cut off its current direction of flow. By using the fact that flowing water destroys torches, it is even possible to create multi-usable water toggles, as seen in this video.

Water can flow up to seven blocks away. (Eight blocks if you count the source block.)

Water Bucket
Water can be collected by right clicking on a water block with a bucket, giving a water bucket. However only water spring/source blocks can be collected, not shallow flowing water.

Springs
Springs can consist of either Water or Lava. Springs are randomly generated in caverns underground and sometimes above ground. Springs can also be placed by the player by picking up Water from the ocean by use of a bucket and then placing the Water again. A spring will generate Water which cannot flood a room because Water cannot spread into a space that is not bordered horizontally by at least two water source blocks. If a spring is removed, all Water that was created from it will also be removed (unless it spread a source block into a horizontally adjacent block), which makes it hard for things to be ruined by springs (with the exception of fragile, non-solid blocks like torches).

Infinite water source


An infinite water source is an endless supply of water, created naturally or by the player, where infinite water source blocks form on top of a water source block or another block. Whenever the player uses a bucket to scoop water out of this source, it will just fill back up again. All naturally occurring bodies of water are typically infinite water sources, including oceans, rivers, lakes and wells. Underground Springs are not an infinite water source.

The easiest and smallest infinite water sources are made by making a 2x2 square of water, or a 3x1 rectangle of water, only retaking the center square, both requiring only two buckets of water to create each (placing in corners of the square or on sides of the trench). Another design is to make a 3x3 square that is one block deep, filling in three of the corners. A less efficient design is to dig a '+' shape and place 4 water blocks in the 4 'arms', making the middle an infinite water source.

Infinite water sources are possible in Minecraft because any block of flowing water which is horizontally adjacent to two or more water source blocks will become a water source block, as long as the block underneath is either a solid block or a water source block.

Fire extinguisher
Water will destroy any fire block it flows into, and will also extinguish burning players or mobs. It will also destroy lava in many situations (not all). Also, dumping water while in the lava can get the player trapped under the resulting obsidian or cobblestone.

Cobblestone generator
If the flowing water and flowing lava blocks collide on the same level or flowing water falls onto flowing lava, cobblestone will be created and regenerated in the same spot whenever mined, providing a 100% renewable way of collecting cobblestone.

This will not work with source blocks, as a water source block affected by lava will turn into stone and lava source blocks affected by water will turn into obsidian with no chance of retrieving the liquid for either case.

Stone generator
If flowing lava falls onto flowing water, or a water source block, stone will be created and regenerated in the same spot whenever mined. When used in combination with a pickaxe enchanted with Silk Touch, this will provide a renewable source of stone and forgo the process of cooking cobblestone to create stone blocks. Since stone takes slightly less time than cobblestone to mine, a stone generator is a more efficient method of collecting cobblestone than a cobblestone generator.

Water for obsidian
Water can be used for making obsidian. If flowing water hits lava source blocks (not flowing lava blocks), the lava source blocks will turn into obsidian. Obsidian can only be mined using a diamond pickaxe.

Water for clearing blocks
Water can be used for flushing away tall grass for building. This is also an efficient way to harvest Seeds and flowers, harvest crop fields, and to gather rails from abandoned mine shafts.

Water as blast controller
Water has 500 blast resistance. If a layer of water exists between a destructible block and common types of explosions, the water will absorb the force of the blast, and the block will not be destroyed.

A one-block-thick water screen will stop most explosions, such as from creepers, from reaching the other side. However, a player laying multiple blocks of TNT should mind the placement of the explosives, as primed TNT entities may launch each other through the water screen.

Water Door
A mob-proof door can be created using water. The player can place one or more water source blocks in a line at the top of a door frame then place slabs around the water sources and around where the water hits the ground in order to make the water not spread. The result is an interesting doorway that mobs, besides players, cannot travel through.

Underwater bases/shelters
If the player digs 3 blocks down into the bottom of a lake/water body, then digs into the wall of the hole (at least two blocks high), an underwater base can be made. To stop the water from flooding the base, dig the hole through which you enter 1 block deeper than the base's floor. Also, if you want to mine underwater, you can prevent drowning by digging a three block deep hole underwater, then going into the hole and covering the top with any material that blocks the flow of water. Alternatively, players may dig into walls or use signs to create air pockets. The hole will drain, because the water in that hole is flowing water, not a water source block. Cutting off the flowing water from the water source blocks the ocean is made of will drain the hole. The simplest two methods, however, are to use torches or a bucket. Torches, when placed on a block, will create a quick 1x1 air hole. Simply do this at eye level (2 blocks) with a wall next to yourself, and your air will replenish. A bucket can also pull water out of an area and leave an air gap momentarily, enough for the player to breathe.

If you wish to make a base on land that is hidden by water (to minimize theft or griefing in multi-player), you can use this method: Find a lake or body of water. Go to the bottom, and dig a 1 block hole as deep as you want it to be, then fill the hole with ladders. The ladders will eliminate the water, and you can jump in the lake and climb in and out of the hole (Though in order to climb out, you must hold the space bar when you reach the top of the hole in order to swim to the surface of the lake) Once you have filled the hole with ladders, you can dig/mine a cavern as large as you wish. You can use this cavern as your home or a base.

Water elevators
A source block placed high above the ground will form a waterfall. (In Classic, a similar effect could be managed with sponges.) These can be used to swim safely up or down a great height. Since Infdev, swimming halfway off of a falling-water tile (that is, "on the edge" of the waterfall) lets a player avoid damage from drowning while swimming up or down.

Jumping off structures
Water can be used to jump off of buildings and structures that would otherwise kill you by building a pool to land into. As of 1.4.3 Pre-release, one-block-high shallow water is sufficient to prevent damage. This can be used along with water elevators to enter and exit a very deep mineshaft or cave in a matter of seconds, saving time, and also saving the wood and stone otherwise used to make ladders and steps. It is recommended that you make a fairly wide pool in case you hit the edge and die, unless your hole is 1x1.

Water brake
Alternatively, you can create a floating "water brake", using water held in mid-air with ladders, signs, or other non-solid blocks that resist water. Two or three blocks above the bottom of your vertical mineshaft, place a ladder to support the water block, then place the water block above the ladder. The way this works is that when the player collides with the water, it reverts the falling distance to zero and slows the player's downward velocity dramatically. The player can then safely land on the solid floor in a 2 block high air pocket under the water without taking fall damage or having to swim.

Water tram
Road-like canals can be built with flowing water contained by signs, pressure plates, or similar blocks. This provides horizontal transportation by boat that is significantly faster than sprinting.

Videos
Note: The video states that "Infinite water sources are found all over the world in shallower areas." Ever since the 1.5 update, this is no longer the case - water source blocks form even if there isn't a solid block under them, as long as there is a water source block under it, meaning even deep bodies of water can be used as infinite water sources.

Trivia

 * Zombies and Skeletons can survive daylight if they are in water.
 * Endermen take damage, teleport, and become neutral when in contact with water. This makes water buckets useful for if you have accidentally angered an Enderman.
 * Blocks under water will only take longer to break if your head is under water. If your head is above water the block will be destroyed at normal speed if you are touching the ground.
 * If you sneak while in water, you will be as slow as if you were swimming in lava.
 * In Classic, water flows without animation. This means it's infinite unless a player blocks the water.
 * With the /give command, you can get the water block itself. This doesn't affect the physics similar to fire in which you can get the actual fire block. Also, if you have the water block and place it in the Nether, you can use water normally (but only if you have the block, NOT a water bucket).
 * While underwater, the player's FOV is lowered by 10 to simulate light refraction.
 * If there is a block in the water without a water source block directly beneath it, there is a small pocket of air beneath it. If a player swims up while underneath this block and holds the space bar, a glitch may occur; the water itself will look like air and will no longer seem to block light while holding the space bar. This glitch allows a clear view of the ocean floor, and also applies to lava. This glitch is client-side only, and may cause drowning in multiplayer.
 * Blocks take 5 times as long to break if the player is underwater, and 25 times as long if they are both underwater and not touching the ground if you can get the drop by mining it.
 * If you have a waterfall with no blocks directly next to it on any side (diagonal is OK), you move faster up the waterfall. Signs, ladders, etc. are declared "blocks" in this case, and will make you move slower. In other words, the pattern below will make you move faster up a waterfall (and slightly slower down the waterfall). As long as you maintain the four air blocks around the water, you will move faster upwards.
 * There is an uncommon glitch where in the ocean, there are large floating air pockets without signs or fenceposts to create them.
 * Since 1.8, particles can be seen throughout the water. This is most noticeable underwater, but can also be seen above. The particles suspended in water are the same as the particles seen near bedrock level.
 * Prior to 1.0.0, the Silk Touch enchantment could be used to gather ice in Survival mode and bring it to the Nether, making it perfectly possible to bring water to the Nether.
 * Briefly in 1.9 Prerelease 5 both water and lava would appear when surrounded horizontally by four source blocks, regardless of the block underneath. Additionally water would form source blocks underneath new source blocks, creating pillars as far down as it could go unobstructed.
 * As of 1.9 Prerelease 6, when water is not beneath any block, it will freeze in snowy biomes. However, breaking the ice block will still release water.
 * Water flows at 0.25 seconds per block (1/4 second/Block), taking it approximately 1.75 second to reach the maximum water range on a flat surface (7 blocks excluding the source).
 * The only hostile mobs to be able to swim/ford upstream towards the player are cave spiders and normal spiders. The rest do not have enough strength and are swept downstream.
 * If you look at water from a distance it will appear to be vibrating.
 * Sometimes a mob may get stuck in vertically flowing water, causing it to drown and die.
 * Before version 1.3.1, it was possible to drown in a 3 block deep water pool if the player is unable to place blocks. The knock-back of water damage will keep the player from swimming up.
 * In Peaceful mode, it takes twice as long to drown because of the constant regeneration of health.
 * You can make a "water block" by placing four Glass Panes around water. This will let you see the water in a 3D shape of a cube.
 * If you use right click with a water bucket on a water source block, it will make particles like when you break a block. This makes it seem like the water source block is a solid block.