Dispenser

A Dispenser is a special redstone-powered block. When right-clicked, a menu allows you to place items inside it. Each time the block receives power from a redstone circuit, a random item from its inventory drops out. Dispensers resemble furnaces and droppers, but the three blocks have different uses and crafting recipes.

Crafting
When placed, the dispenser faces the player (it will dispense items towards where the player is standing). Note that with the addition of damage to bows in 1.0.0, you cannot use a damaged bow to craft a dispenser. Also note that enchanted bows cannot be used for crafting a dispenser.

Dispensing
The exact action of a dispenser on the items contained in it depends on the specific item.

All items which are fired out have a random variation in direction.
 * Most items will simply be ejected as items and land 3 by 3 blocks away if on level ground, similarly to items dropped by a player.
 * Arrows, Fire Charges, Chicken Eggs, Snowballs, Splash Potions, Bottles o' Enchanting and Firework Rockets are fired out like the right-click action of the items carried by a player.
 * Arrows fired from a height of 2 above level ground will go anywhere from 10 to 21 blocks away. When firing arrows, its optimal range for mob killing (if placed at eye level) is 1 to 5 blocks with a hit ratio of about 98% at the edge of the 5 block range on a target the size of a standard mob. Arrows will cause damage, and can be picked up, unlike those fired by skeletons.
 * Chicken eggs and snowballs break with most of the usual effects. Any projectiles shot by the dispenser do not knockback the mobs that it hits; it is unclear whether this is a bug or not.
 * Fire Charges will become fireballs of the same type as Blaze fireballs and will continue in a straight line (though the line may be at an angle from the dispenser). Upon being dispensed, the fire charge will make the same sound as Blazes and Ghasts when they launch their projectile. However if used by the player, it makes the same sound as Flint and Steel.
 * Spawn Eggs will result in the corresponding mob being created with its feet in the block directly in front of the dispenser, with no initial velocity.
 * Minecarts and Boats will be placed (as their entity form), but only if the dispenser is placed above water (for boats) or on a rail (for minecarts).
 * Water and lava buckets will place water and lava source blocks. Water and lava source blocks will also be taken if there is an empty bucket inside.
 * TNT will be placed and ignited with no velocity.
 * Flint and Steel will ignite fire in front of the dispenser consuming one durability.
 * Bone Meal will be used on the crops it is pointing at.
 * Armor will be equipped on a player from 1 block away.
 * Pickaxe will be destroyed if placed on a dispenser

When a dispenser dispenses an item, it emits a clicking sound (unless the item is a projectile or a Spawn Egg) and a puff of smoke. If it is empty when activated, it emits a slightly higher-pitched click.

Triggering
Unlike most other redstone devices, it may be triggered by redstone wire placed up to one block adjacent to it as well as running directly into it; therefore a single redstone wire can trigger up to 5 dispensers in a cross pattern. This allows for easy creation of large walls of dispensers.

As of Snapshot 13w02a or higher, you can place redstone on dispensers by sneaking when placing. In versions previous to 13w02a, this can be easily overcome by placing redstone on the side of a block diagonal to the dispenser or on the bottom of a block two blocks above the dispenser. Another use for dispensers is delaying. Using a single water current and a wooden pressure plate, you can delay a signal up to 11 seconds. The equivalent of this is 28 redstone repeaters, which is quite expensive. For even longer delays, the item despawn time can be utilised. This can be done by using a dispenser to eject an item onto a pressure plate, which then has its current inverted and wired to the next dispenser. After 1.3, dispensing more than 1 item every 5 minutes will cause them to stack and no extra time will be added to the 5 minute despawn of the first item.

Dispensers are most effectively used offensively with a 5-clock or pulser hooked up to a pressure plate or switch.

A dispenser will work if it is placed underwater, even without any blocks touching it by placing a redstone torch underneath it. Also it can be properly wired by placing the redstone in a tunnel underneath the water.

A mob killed by something dispensed will not drop XP.

Probability distribution
Currently each stack in the dispenser is picked with equal probability. That is, if there are x stacks in the dispenser, the probability that a particular stack is picked is 1/x. Beware that the distribution isn't weighted by stack size. That skews the distribution of individual items. For example, if there are two stacks in the dispenser, one of 18 dandelions and one of 6 roses, at first dandelions and roses are equally likely. Roses will run out rapidly, after which the distribution abruptly changes to 100% dandelions. Example output:

If each individual item were picked with equal probability, as if each item of a stack were in a different slot, the distribution would stay at roughly 75%/25% even over time. Indeed the output would be a uniform random permutation:

While such behavior is impossible to replicate for anything over 9 items, it can be approximated by splitting stacks such that each stack is fairly small and has the same number of items. For example, three stacks of 6 dandelions will neatly complement the stack of 6 roses. Splitting into stacks of 3 would be even better, since smaller stacks can't retain as much 'undeserved' probability.

Trivia

 * The Dispenser uses the same texture as the Furnace on all sides except the face, which has a unique texture.
 * If a redstone torch is placed on one side of the dispenser, and a redstone wire on the opposite side, the dispenser will activate. (As of the 1.5 Pre-Release, this is no longer true.)
 * You can use dispensers to delay Redstone circuits by intervals of five minutes, hook up a wooden pressure-plate to an i/o reverse then to a dispenser and put an item onto it. when the item vanishes then the Redstone charge will change state.
 * The texture file for the dispenser menu is named "trap.png", which suggests that it was originally designed for making arrow traps.
 * Pistons cannot push or pull dispensers, because they are tile entities.