Bone

Bones are items dropped by Skeletons when they are killed. Bones were added in the Minecraft Beta 1.2 update. Skeletons drop 0-2 bones on death.

Uses
Bones can currently be used to make Bone Meal, which is a fertilizer for farming that immediately makes plants grow to their mature state, and also a dye that makes wool white. In beta 1.4 you will be able to tame wolves into dogs using bones. To tame a wolf into a dog, you must feed it a bone when smoke appears around its head. According to Jeb's twitter, the number of bones required to tame is random.

Crafting
Bone creates 3 bone meals when put in the crafting table.