Sun

The Sun is a sprite appearing in every version of Minecraft except Classic that lights up all top-most blocks while it is in the sky. When the player creates a new map the sun starts on the horizon at dawn. As time passes, it will slowly move across the sky and over the horizon while the moon rises on the opposing horizon. Daytime lasts 10 minutes and grass blocks will spread most quickly when exposed to sunlight. The deeper underground the player is, the less sunlight will illuminate the ground, and ultimately there will be no sunlight at all. A gap or a vertical shaft in the ceiling of a cavern will allow sunlight to filter in.

Sunlight
Sunlight, in game, is the name given to the light which illuminates all blocks which do not have a shadow cast over them by a non-transparent block positioned vertically above them in the sky. Clouds do not cast shadows, and shadows are not affected by the position of the sun in the sky. As of Beta 1.5, however, clouds in weather like rain or snow will be darker, and the light coming from the sunlight will not be as bright. During these storms the ambient light value during the day will be reduced to 12 from the usual 15, and in thunderstorms the light level will be reduced to 7, allowing aggressive mobs to spawn.

Sunlight (or torchlight) can be used to turn dirt blocks into grass blocks, as long as there is an illuminated grass block adjacent to the dirt. Sunlight alters the brightness of the blocks it falls upon.

Mobs
Hostile mobs will not spawn in sunlight, although existing mobs are affected in different ways by it. Sunlight is harmful to skeletons and zombies, and they will be set on fire upon entering an area illuminated by sunlight. Note that it is possible for skeletons and zombies to survive in direct sunlight if they are in a body of water or standing in rain. Spiders turn neutral during the day, until damaged by a player. Existing slimes and creepers are unaffected by sunlight.

Trivia

 * The sun is 8 x 8 pixels, which is enough resolution for Notch to have given the Sun a circular shape if he had wished.
 * When the sun rises and sets the blocks change their light level depending on what angle the sun is at (giving the effect of gradually getting lighter at dawn and gradually getting darker at dusk).
 * You can't see the Sun with a render distance set to below normal.
 * The sun is also larger during sunrise and sunset.
 * The Sun and Moon seem to appear larger when in the corner of the Minecraft window.
 * The position of the sun in the sky does not affect lighting and shadows, so a device such as a sundial would be impossible.
 * According to Notch, the Minecraft sun actually rises in the North, not in the East.