Squid

Squid are 8-armed mobs that spawn in water. Squid are always passive towards the player, akin to the other passive mobs found on land. They can be found in water of any depth, in any biome, and spawn on any difficulty.

Appearance
They have 8-arms, blueish-teal skin and teeth that can be found underneath the head.

Uses
When killed, each squid will drop 1 - 3 ink sacs that can be used to dye wool. The ink sac, like a unit of dye, can be applied directly to sheep before shearing to make black wool or mixed with varying proportions of bone meal beforehand to yield light gray and dark gray dyes. It is also possible to craft a book and quill using an ink sac, a feather, and a book.

Behavior
When moving about, the squid's tentacles open and close, giving them an appearance of pushing themselves forward. Squid will hover in place and wander around one layer aimlessly and do not deliberately interact with the player, even if attacked.

Squid are prone to gather near light under water, such as a Redstone lamp, glowstone or Jack-O-Lanterns.

Squid stay alive but become immobile when beached on the land. They can take fall damage and burn like any land mob, but (due to being aquatic) they cannot drown.

Squid (unlike land-based mobs) can swim against a current and not get pushed by it.

Farming
Squid, although being able to swim against the current, can not swim up a waterfall. The simplest way to trap large numbers of squid is to dig an approximately 8x8 hole three blocks deep at the bottom of an ocean or large lake. The fall of water into the hole will trap squid that wander over it. Complicated funnel and channel systems can bring squid from multiple traps to a central location for the player to kill. Here is the tutorial to this 

Bugs

 * Despite not having feet, Squid make footstep sounds when swimming across blocks.
 * When logging into a multiplayer server, Squid may appear above the clouds. However, they will later disappear.
 * During multiplayer lag, mobs' positions are not updated by the server, causing especially irregular movement in Squid, such as flying and passing through blocks.
 * If the player stands far away, Squid will shift so that their heads point straight up and float in place until the player gets closer again.
 * When killed, Squid drop Ink Sacs, but take a second to disappear. This is perhaps due to mobs being made to play a "death" animation, which isn't compatible with squid.
 * During multiplayer lag, Squid are temporarily invulnerable to T.N.T.
 * During multiplayer lag, Squid will also fly up in the air if you hit them with any specified item.
 * Squid, when killed, may not drop experience orbs.
 * If the player views a Squid without looking at the main body, two of their tentacles do not appear.
 * During server lag, squid may "swim" on the ground if that ground is 1-2 blocks above water.
 * Sometimes, in SMP, squid spawners will spawn squid on land.
 * Often when you look through the water at a squid, they will have short spasm while swimming.

Trivia

 * Squid are the first and so far the only water mob.
 * Hitting a squid underwater causes them to rise approximately 1/3 to 1/2 a block.
 * Squid cannot be damaged by attacking their tentacles.
 * Before Beta 1.4, using a bucket on a squid while the squid was not touching another block would yield milk.
 * Real squid have eight arms and two tentacles, while Minecraft squid just have eight arms, making them more akin to octopodes. This may be a mis-translation due to the fact that squid and octopus have the same name in Swedish (Bläckfisk - Ink fish).
 * Squid behave like some land mobs and attempt to ride a Minecart. However this is not always useful as rails and water cannot occupy the same block.
 * Squid are the first passive mob that spawn at any light level, in water, and without grass.
 * When the world is loaded, all squid are aligned with the tentacles facing east.
 * It is possible for squid to spawn in underground lakes or waterfalls due to their ability to spawn in any water, source block or not.
 * In RC2, when Squid came out of the water and were hurt, they made the new player hurt sounds.
 * Squid spawners will only spawn them on layer 60, as the large water bodies (such as oceans, rivers and ground lakes) appear only on that depth. This means squid can no longer spawn in mountain springs or underground lakes.
 * Squid, Villagers and Snow Golems are the only mobs that don't make sound effects. (Snow Golems don't have idle sounds. However, it does only make one sound: when it's throwing snowballs.)
 * Squid are the only passive animal that cannot breed; due to this, however, they will spawn like the other animals used to.
 * It is possible for a squid to receive fall damage.
 * Squid, along with Ocelots are the only passive mobs that can despawn.