Sponge

"Just like in real life, sponges in Minecraft have handy absorbent powers. Once placed, the sponge block will slurp up surrounding water and any more water that's foolish enough to cross its path. Impressively, this thirsty block can drink up to 65 water blocks before becoming a wet sponge. Sadly, a wet sponge can't absorb any more H2O, its glory days now long behind it."

- Tom Stone

A sponge is a block that can be used to remove water around itself when placed, turning into a wet sponge in the process.

Obtaining
Either type of sponge can be mined by hand, or with any tool, dropping itself as an item. Mining time is not affected by the tool used.

Drops
An elder guardian drops one wet sponge when killed by the player. Since elder guardians do not respawn, this does not make sponges renewable.

Natural generation
Ocean monuments have a chance of generating one or more rooms containing wet sponges. Each room contains an average of 30 sponges.

Drying
A wet sponge can be dried in a furnace, making the sponge reusable.

Usage
A sponge can be used to turn water into air (it "absorbs" the water). To place a sponge, a sponge item while pointing at a surface facing the space the sponge should occupy.

A sponge instantly absorbs nearby water when it is placed next to water or when water comes into contact with it (by being placed next to the sponge, or by flowing towards it). A sponge absorbs water around itself (water source blocks or flowing water) out to a taxicab distance of 7 in all directions (including up and down), but won't absorb more than 65 blocks of water (water closest to the sponge will be absorbed first). The absorption only propagates from water to water and won't "jump over" non-water blocks (including air).

When a sponge absorbs water, it turns into a wet sponge, and will be incapable of absorbing more water in this state.

Data values
A sponge has the ID name  and is further defined by its block data. A sponge also has a block state which is expected to replace the functionality of block data in a future version.