Water

Water is a fluid that can only be placed by the player when using a bucket (unless commands or external programs are used). On newly generated maps, water is common at 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. One can also use the /setblock command to place water in The Nether.

Behavior
Water reduces the movement speed of mobs traveling through it. It is possible to overcome this and travel quickly across the surface of large bodies of water by using a boat.

Flowing water pushes mobs at a speed of about 1.39 meters per second. (or 25 blocks every 18 seconds)

Light


Water reduces light by 2 for every block, in addition to normal dispersion, so visibility lowers as the water gets deeper.

There are three ways of increasing underwater visibility. 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.

Finally, the third is by drinking a Potion of Water Breathing

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.

Current
The current in a water block determines both what direction it will appear from its texture to be flowing, and what direction an entity such as a player or boat will float from that block.

The horizontal current in a flowing-water block is based on a vector sum of the flows to and from that block from its 4 horizontal neighbors. For example, if a block receives water from the north and sends it both south and east, but borders a solid block on its west edge, then the current in that block will be south-southeast, because 2 southward flows (in and out) are combined with only 1 eastward flow (out). Thus, 16 horizontal directions are possible. If a branch in a channel is 2 tiles wide at its entrance, then entities will float into it rather than continuing in a straight line.

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 or destroyed by Wither.

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. Alternatively, other methods can be used to achieve the same effect, such as making the frame at least 3 blocks deep and removing blocks above and below the frame for water source and water capture. The result is an interesting doorway that players can travel through, but other mobs cannot.

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. A hole placed behind the veil of water will prevent the entrance from flooding. Also, to mine easily underwater, 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 underwater, will create a space of air before they drop. An empty bucket can create a temporary pocket of air anywhere.

Bases can be made in shallow bodies of water, such as lakes to deter griefing. By deepening the water one block and then adding ladders, an airlock is created while providing a means for reentering the water from below. A cavern can be created below the ladders as the actual 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 from otherwise lethal heights. Currently, two blocks of water is sufficient to prevent fall damage, although increasing the surface area of the pool makes an easier target to land in. Used in conjunction with water elevators, these pools are very a very effective means for traveling vertically.

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.

Entity movement
In the same vein as the tram, entities, for example mobs or items, can be pushed around by water flows. Large numbers of such entities can cause some lag, but lag is especially caused when the entities leave or enter the immediate render range into the 'lazy chunks' around the player (a 2 chunk wide border just outside of render range). Circular-like patterns that cause the entities to leave and re-enter will cause enormous lag spikes.

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. Water buckets are useful to calm angry Enderman.
 * 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 mine if the player's head is underwater, which is indicated by the presence of the respiration bar, and 25 times as long if they are both underwater and not grounded.
 * Players move faster up waterfalls with no adjacent blocks as seen below. Note that signs, ladders, etc. are considered to be blocks in this respect.
 * Sometimes large pockets of air generate in oceans due to a glitch involving Abandoned Mineshafts.
 * Currently, 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, water could be brought to the Nether in the form of ice blocks.
 * 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 able to move upstream towards the player are cave spiders and normal spiders. This may be a result of their habit of frequently jumping.
 * 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 for players to drown if they are naturally regenerating health.
 * Collecting water with a bucket makes particles similar to the ones seen when blocks break. This makes it seem like the water source block is a solid block.