Sponge

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

Obtaining
Sponge can currently only be obtained in creative mode or by inventory editing.

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.

Usage
Sponges have no use but decoration.

Sponges will absorb a 5×5×5 area of water around themselves in a ‘sphere’. The sponge must be directly touching a water source to absorb water, and will only absorb water connected to an adjacent water block touching the sponge. They are useful for clearing large areas of water, although the finite amount of sponge in each ocean monument means that they need to be placed carefully. When a sponge absorbs water, it will convert to a wet sponge, which is darker, drips water, and is unable to soak up any more water. Wet sponges can be dried in a furnace. The most efficient way to use sponge is to start at the top and go down; sponges placed at the bottom will just result in water flooding the cleared area.

Trivia

 * Sponges can be used to dry out water lakes on the surface in order to obtain any clay that might be found in it more easily, as well as dry out any water in a lake in a cold biome that's at least 2 blocks deep in order to obtain not only the clay, but also ice (with Silk Touch).
 * Using Sponges on a shallow area in a swamp is an effective way of harvesting lily pads and any clay that might be on the bottom.
 * When mining, if an underground water lake is encountered, sponges can be used to dry them out to easily obtain any ores that might have been exposed by the lake's generation and are underwater prior to drying it out.