Sponge

Sponge is a block which currently has no uses rather than decoration. In the 1.8 update, Sponge will have new behavior and a variant, Wet Sponge.

Obtaining
The sponge currently only obtainable via Creative mode or inventory editing.

Future (1.8)
On June 8 2014, Jeb stated that he is re-adding sponges to survival for 1.8. They still clear water as they did before, though their mechanics are more complex than simply clearing a 5x5x5 area. They still remove water in what appears to be a 5x5x5 area, but it will only remove water if water is touching it, and will remove only water that is connected to the water touching the sponge. This will transform it into a wet sponge, which is darker and drips water particles. Wet sponges make no attempt to keep the cleared area clear of new water, thus getting around the specific bug that required disabling the old sponges in Infdev. The new sponges have undergone a slight retexture. The Sponge Block will be available in Survival Mode, but will not be crafted, and can be found by the methods below:

Obtaining
Ocean monuments have a chance of spawning with a room containing stalactites of wet sponges.

The Elder Guardian drops a wet sponge when killed by a player.

Drying
A wet sponge can be dried in a furnace making the sponge reusable. If a bucket is placed in the fuel slot after the fuel is used up, including if the fuel was lava in a bucket, the water will drain into the bucket. This is currently the only way to get the water back.