Lava

Lava is a fluid block that can only be placed by the player when using a bucket. It emits light and sets surrounding flammable blocks (wood, fences, etc.) on fire. On newly generated maps, lava is a common sight underground and in lava lakes that occasionally generate on the surface or most likely found anywhere at the floor of the Nether.

Natural occurrence
Lava primarily occurs as magma in large pools deep underground, on levels 1 through 10, covering 8% of horizontal area. It can also occur as lava rivers from a single spring block, pouring down walls into pools. It is one of the most common causes of death while mining underground and is especially nasty because the items in your inventory are likely to burn up in the lava. But, if precautions are taken (not digging straight down or up, having buckets of water), accidents can be prevented. The popping sound effect of lava can also be an early indication of nearby lava.

Lava also spawns as lakes. They are rare and can be found at any elevation within any biome, can cause forest fires, and sometimes have floating chunks of stone or dirt above them, occasionally with vines or trees growing on the floating chunks (very small islands are sometimes in the center of a lava lake as well.) Lava lakes vary in size and depth, and the lakes will carve out a small air pocket area above them when generated, causing a ceiling underground or possible floating objects above ground.

2 blocks of lava can also be found in NPC Villages in Blacksmiths' houses.

In the Nether, lava is extremely common, appearing more frequently than water in the Overworld. Seas of lava occur, with sea level at level 31, about a quarter of the total height of the Nether (as 63 is about a quarter the height of the Overworld). They extend down to about level 22 at the most. Lava also appears in single blocks inside the netherrack. This makes tunneling in the Nether very risky, and where lava blocks are exposed, they create lava falls from the ceiling or walls.

Burning

 * Most entities, including players and mobs, will take damage every half-second from being in contact with lava, and will also be set on fire. Nether mobs (which are immune to fire) will take no damage, nor will players or mobs affected by a potion of fire resistance. In the Overworld, lava is extremely deadly and kills more or less anything in its path. If the victim touches water or rain falls on it, the fire will be extinguished, but the lava will continue to damage them directly.
 * TNT, bookshelves, leaves, carpets, wool, fences (but not gates), vines, tall grass, wood logs, planks, and wooden stairs are flammable. Wooden slabs and double slabs are flammable. If flammable blocks are close to lava they can catch on fire, the mechanics for this are the same as of fire. Non-flammable blocks are unaffected by this effect, and do not spread active fire.
 * The “embers” or “fireballs” which fly out of lava are purely decorative and do not cause fires or damage to entities.
 * Warning: even if you are playing on peaceful difficulty, it is still possible to die. The regenerating hearts and loss of hearts from being on fire will simply counteract each other, and the player's hearts will fluctuate by only a half a heart, keeping them alive and giving them longer to find water. However, if you stay in the lava itself, you will lose hearts much more rapidly and die.
 * If a flammable block is covered in lava on all 6 sides, it will not catch fire or decay. (Decay as a normal block on fire)

Flow


Like water, lava flows from "source blocks". Most streams or "lava-falls" come from a single source block, but lava lakes (including the "flood lava" in the bottom 10 layers) are composed entirely of source blocks. Only a source block can be captured with a bucket. Lava flows far more slowly than water, and sometimes sourceless lava flows will linger for a very long time. Also, after 10 hours, it will decay completely. In the Overworld, lava travels 3 blocks in any direction from a source block, but if it is placed above the ground, it will travel 4 blocks in any direction after hitting the ground. Lava travels faster in the Nether than in the Overworld.

Lava which is flowing will destroy the following in its path: saplings, cobweb, tall grass, dead bush, wheat, flowers, mushrooms, snow on ground (but snow blocks are immune), lily pads, vines, levers, buttons, both types of torches, redstone wire, repeaters, and rails. Sugar cane holds back lava, but will disappear if the sugar cane's water source is destroyed by the lava.

Using a redstone wire, a one-block lava flow can be redirected by supplying power to the spring block, which will cause it to reset the flow towards the now-nearest terrain depression. This is further elaborated in this thread (only viewable when logged-in). It cannot, however, be reversed. This re-calculation is made because redstone wire when toggled changes the block from redstone(on), to redstone(off). Whenever a block updates on any side of lava, the lava re-calculates where to flow, but does not cut off its current direction of flow.

Lava and water

 * If lava flows on top of still or running water, it creates stone.
 * If lava flows horizontally into water, cobblestone is created. Using this you can create cobblestone farms.
 * If water flows horizontally into lava, a hiss and puff of smoke occur but nothing changes.
 * If water flows vertically into lava, cobblestone or a hiss may result.
 * If water flows into a lava source block then obsidian is created. The lava spring is destroyed in the process, so unlike cobblestone it is not continuous and renewable.
 * If vertically falling water touches a lava source block on any side obsidian is created - even if the water would not run into the lava's square.

Other points


If lava falls onto redstone wire bordered by water, the redstone turns into obsidian, with no loss of lava. This is considered a bug, however Notch has said that it will remain for the meanwhile as a feature; see the section on obsidian for more information.

If there is a body of lava flowing above a block, the lava visually seeps down through the host block provided you are within a certain number of blocks to it (creating a "dripping" ceiling 100 blocks above you for example would fail, only dripping when you fly up to see what's wrong). This "dripping" effect also applies to water, although water droplets seep through at a much faster rate. However this does not occur with transparent blocks, because the game assumes that you can see through them, which is a danger when the lava is above stairs, slabs, or other nominally transparent blocks. These droplets are purely aesthetic and will not affect the player or other blocks in any way, except make it look like the block has lava or water above it.

Lava Bucket
You can collect and place lava springs using a bucket. As with water, you can only harvest the springs, not the flowing lava coming from them.

Lava can be used to make obsidian, to light an area, or to create traps. When used to create obsidian, water will be used to cool the lava either before collecting it with a diamond pickaxe in a mold in the desired shape, or by emptying the bucket next to an artificially created waterfall.

A Lava bucket is a very efficient fuel. It has the longest burning value of 1000 seconds, compared to 800 seconds for a coal block (a lava bucket smelts 100 items, a coal block smelts 80). After smelting starts an empty bucket remains, except sometimes on Minecraft: Xbox 360 Edition, the bucket disappears.

Lava buckets are often used as weapons due to its powerful damage and re-usability. Its use as a weapon is documented in the combat tutorial article.

Lava molding
Lava can be combined with water for molding obsidian, stone or cobblestone structures of any size when used properly:

Pros

 * One does not need to contain lava on all sides; lava flowing freely down is often used.
 * The size of structures is almost limitless (the sky IS the limit). Many structures are massive.
 * Lava molding can have very desirable architecture, mostly from downward flowing lava.
 * With only a few starting blocks, one can build very massive structures.
 * Lava molding is much faster than building by hand (this is limited to larger structures).

Cons

 * Lava molding can be very dangerous to players and other entities alike.
 * If one is not careful, they may solidify the source block, creating obsidian.
 * One is often limited to walls and towers.
 * Structures can only be made from either stone (which is harder to get), obsidian, or cobblestone.
 * If you have a full inventory while you fill up more buckets of lava, the filled buckets that don't fit in the inventory will drop out like when you press.
 * Because water cannot be placed in the Nether, lava molding does not function in the Nether.

Trivia

 * A water source block placed 1 block away upwards diagonally (but not through corners) from a lava block will first flow in the direction of the lava, then other directions facing away from the lava. This happens because water physics treat the place that lava occupies as empty, and try to flow to it. Once the water turns the lava into obsidian, the water physics update to flow in all directions. (The same thing happens with lava flowing over water.)
 * Above-ground lava lakes seem to generate most often in Taiga biomes.
 * An easy way to 'fill-in' large pools of lava is to use gravel or sand, which will fall to the bottom of the pool and stack upwards.
 * You can see the stars when in lava, even though it's supposed to be opaque.
 * If an item falls into the edge of a lava pool, it may pop back out and appear as if it were burning. Also, you can pick the item back up once it's back on land. Occurs more commonly in SMP.
 * Although lava is a liquid, it is not possible to drown in lava. This applies to all mobs.
 * Unlike water, lava does not stop a player's fall, though 9 continuous blocks of lava will mitigate any fall damage.
 * Arrows shot by the player will only catch fire if shot in flowing lava and not still lava.
 * You cannot put 4 blocks of lava in a 2x2 square or 1x3 line to create an infinite source of lava like you can with water, even in the Nether.
 * End Portals can be seen yellow if exposed to the surface when you are in lava.
 * Lava can also be used as a garbage disposal by dropping unwanted items into it.
 * Lava can set off tripwires, because they break placed string. It will only trigger it once.
 * While the player is in lava, all entities appear bright red.
 * Lava is the only block that is much easier to destroy with 2 TNT than with 1. The first TNT makes it start flowing, which allows the second TNT to destroy it.
 * When the player is in a bed, they cannot be damaged by lava.
 * When you are submerged in lava with the Night Vision status effect, the players view turns a brighter orange than without the effect.
 * In the Xbox 360 version, lava cannot be placed near the spawn point.
 * Occasionally a dropped item will fail to burn up in lava, instead catching on fire and hopping around the surface randomly. These random hops (each one occurring just as it should disappear) sometimes take it back to shore but sometimes never do. This happens more often in the Xbox 360 version but has been observed in the PC version rarely.
 * Lava 'currents' won't push you like water currents will.
 * While lava buckets can be used as fuel in a furnace, actual lava blocks (Block ID 10 or 11) cannot.