Grass

Tall Grass (named Grass in the inventory) spawns on Grass blocks in certain biomes. Tall grass is not a solid block, but rather an aesthetic plant that does not obstruct movement, similar to Sugar Cane, Dead Bush and Wheat. It occurs naturally and in larger quantities than the previous plants. Bone Meal can be used on a grass block to grow Tall Grass and occasionally Flowers on it and in its vicinity.

Tall grass has three variants (defined by their data value).
 * Tall Grass (the most common)
 * A triangular-looking fern (also known as "living shrub")
 * A dead bush-looking plant that does not occur naturally. (not to be confused with the Dead Bush appearing in desert biomes)

All three variants will occasionally drop Wheat Seeds when broken; a Hoe is not required to produce seeds from this block. Tall Grass and Shrubs can be harvested by using shears, but the Dead Bush cannot.

The non-naturally occurring dead shrub-looking variant is not the same as the Dead Bush. The real Dead Shrub will generate naturally in desert biomes, on Sand, and will not produce any resources when broken. The Tall Grass variant is not naturally-occurring and even though it looks like a Dead Shrub, it cannot be placed on Sand, and will drop seeds like the other variants of Tall Grass.

Water will destroy any tall grass in its way, so one can easily clear large areas covered in grass by using a Bucket to place water, then pick it back up once all the tall grass in the vicinity has been destroyed.

Before snapshot 12w05a, grass made building difficult because it had to be removed to place blocks in that space. Now, any blocks placed in the same space as grass will replace the grass, similar to snow.

Uses
Harvesting Tall Grass is the primary way of obtaining Wheat Seeds, the secondary way being harvesting fully grown Wheat. Because wheat drops many more seeds, tall grass is only useful before you have a wheat farm set up.

As of release 1.1 sheep will eat grass allowing them to regrow their wool. In previous versions a shorn sheep would stay that way. This makes bone meal a more valuable commodity since it allows the player to grow tall grass.

History
Tall grass was first implemented in Beta 1.6 as a natural block. Seeds used to be produced by tilling grass blocks prior to this update.

As of Beta 1.6.6, Bone Meal can be used to instantly grow Tall Grass on grass blocks.

Before 1.8, tall grass couldn't be acquired as an item without inventory hacking. Hacked tall grass in your inventory would appear as the base texture for it, and would appear as the "dead shrub" variety when placed on the map. This was changed in Beta 1.8, and now Grass and Ferns can be harvested with Shears.

The triangular-looking fern (also known as "living shrub") was rare, and only found in Swampland and Rain Forest biomes pre-1.8. At present, since Swamp biomes have been redesigned and Rain Forest removed entirely, "living shrubs" no longer generate naturally. However, as of Minecraft 1.0.0, living shrubs have been made available in creative mode and have been renamed "Fern". Ferns will re-appear in version 1.2, in Jungle biomes.

Bugs

 * Rarely, grass can spawn on gravel.
 * In NPC houses with dirt floors, grass can spawn.
 * If a ravine hits the surface, and dirt is on the bottom of the ravine where sun is hitting, there may be wild grass.

Trivia

 * Tall Grass cannot be directly set on fire from lightning. However, fire from nearby blocks can spread to it. Oddly enough, the top of Tall Grass can be lit but it will not burn this way. When any kind of tall grass is set on fire, the fire seems to hover just over the grass, as if it were a complete block.
 * The color of tall grass is biome dependent and is usually the same color as grass.
 * Tall Grass is slightly offset from the block it is sitting on (as seen in the second screenshot). Jeb has said this is probably intentional to give it a more "wild" appearance.
 * It is currently possible to place blocks on top of tall grass.
 * Tall grass has been known to appear in chunks generated before 1.6 in SMP.
 * A "tall grass" mod existed long before the official release of tall grass, however, the tall grass generation code was not ported to the official game.
 * Tall grass can appear in caves on dirt near lava, and rarely, within a few blocks of bedrock.
 * In SMP, using bonemeal on grass in a spawn-protected area will still produce tall grass and flowers (Although there is no way to remove them afterwards)
 * When touched by water, Tall Grass will break with the possibility of dropping seeds. A quick way to gather seeds is to route water to the top of a grass-covered hill and let it flow down.
 * Tall grass can be found on dirt blocks as well as grass blocks due to a bug in the terrain generation.
 * Fern or Living Shrub was extinct until the Jungle biome was added in 12w03a.
 * By putting a 11x11 area of grass in a completely dark room, and using bone meal on the center block of grass, one creates an instant wheat seed and flower generator. The grass cannot live in the low light level, so it immediately drops as a seed, making obtaining seeds much easier.
 * Since Snapshot 12w07a, instead of destroying tall grass to place a block, you can place a block in the place of tall grass (as with snow). (This probably doesn't make sense. Please refine this)