Lead

Leads, also known as leashes, are items used to leash and lead mobs.

Usage and behavior
Right-clicking on a mob while holding a lead will tie it to the mob, allowing it to be moved by the player. Right-clicking on the mob again will release it. Other inventory spaces can be selected while holding the lead; multiple mobs can be attached to a lead at once.

With a mob on a lead, right-clicking onto a fence will attach any leads you are holding to the fence with a visible knot. Attacking the knot or removing the fence post removes the lead(s). Also if an arrow (Shot by any source [Including Skeletons]) hits the knot, then the knot will break and drop as an item (Including Creative Mode)

A lead will stretch a maximum of ten meters before breaking. Whenever a lead is removed or broken it will drop as an item at the location of the mob.

Most passive mobs can be "leashed". These include: horses, wolves, cats, sheep, pigs, cows, mooshrooms, chickens, and squids. The same can be done to Iron Golems, Snow Golems, and Villagers. However, villagers can only be leashed in multiplayer, as it requires one player to open the trade interface and another to leash the villager while the trade interface is open, as two players cannot access the same trade interface at the same time. Bats are the only passive mobs which cannot be attached to a lead, and any mobs which naturally despawn (such as the squid) will still despawn if they are attached, unless the mob was named with a Name Tag.

It is not possible to attach hostile mobs by traditional methods, but can be done by modifying the region save files. Certain mobs (e.g. bats) however, as well as players, cannot be attached even with this method.

Mobs can be suspended from leads if the fence they are attached to is 7 blocks above the ground. This factor goes for both one and two block tall mobs. The method of suspending mobs is an alternative to adding fences to prevent a mob from moving while on a lead. However, once suspended, the likelihood of a mob dying from fall damage is high, especially if the fence is only the minimum of 7 blocks above the surface.
 * This can be seen here http://www.youtube.com/watch?v=b4jqUuyS844

If the player is holding a lead connected to a mob, walks through a nether portal, then walks back through it, the player will still have the leads attached to the mob. However, if the mob walks into a nether portal, the leads are broken and dropped as items in the other dimension.

Trivia

 * The lead can extend out to 5 blocks when tied between a fence post and a mob.
 * The lead is named as 'leash' in the texture file.
 * Untamed ocelots can be captured and tied up using a lead.
 * In Creative mode, players can leash mobs, pull the mob into the air and tie it to a fence post up high. However, the lead tends to break if the player moves upward too quickly.
 * Despite that the lead is made of string, it has the appearance of rope.
 * Even if you can see the lead, looking away from a leaded mob will cause the lead itself to become invisible.
 * Leashing farm-able mobs (E.G Pigs, Cows) seems to negate the function of wheat after releasing the mob.

Gallery
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