Sun

The Sun is a sprite appearing only in Indev, Infdev, Alpha and Beta that lights up all top-most blocks while it is in the sky. When the player creates a new map the sun starts on the horizon at dawn. As time passes, it will slowly move across the sky and over the horizon while the moon rises on the opposing horizon. Daytime lasts 10 minutes and grass blocks will only spread when exposed to sunlight. The deeper underground the player is, the less sunlight will illuminate the ground, and ultimately there will be no sunlight at all. A gap or a vertical shaft in the ceiling of a cavern will allow sunlight to filter in.

Sunlight
Sunlight, in game, is the name given to the light which illuminates all blocks which do not have a shadow cast over them by a non-transparent block positioned vertically above them in the sky. Clouds do not cast shadows, and shadows are not affected by the position of the sun in the sky.

Sunlight (or torchlight) can be used to turn dirt blocks into grass blocks, as long as there is an illuminated grass block adjacent to the dirt. Sunlight alters the brightness of the blocks it falls upon.

Mobs
Enemy mobs will not spawn in sunlight, although existing mobs are affected in different ways by it. Sunlight is harmful to skeletons and zombies, and they will be set on fire upon entering an area illuminated by sunlight. Note that it is possible for skeletons and zombies to survive in direct sunlight if they are in a body of water. Spiders turn neutral during the day, until damaged by a player. Existing slimes and creepers are unaffected by sunlight.

Trivia

 * The sun is 8 x 8 pixels, which is enough resolution for Notch to have given the Sun a circular shape if he had wished.
 * When the sun rises and sets the blocks change their light level depending on what angle the sun is at (giving the effect of gradually getting lighter at dawn and gradually getting darker at dusk).
 * The sun is larger when seen from underwater than when seen on land.
 * The sun is also larger during sunrise and sunset.

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