Snowball

The Snowball is an item that can be obtained when a snow block or snow is destroyed with a shovel (as of the Alpha 1.0.5_1 update) giving you 4 or 1 snowballs respectively. Snowballs can be placed in stacks of up to 16. They are a throwable item that does not do any damage to Mobs except the Blaze (which they deal to) and Enderdragons (which they deal  to). Snowballs are able to knock back mobs and gives the same effect as if it was damaged (they still seem to damage wolves; this is however a minor bug). This makes it useful for herding and for knocking monsters off high areas. Snowballs cannot be placed and can only be thrown by right clicking. Similar to arrows, they are affected by gravity. Four snowballs can be crafted to create a snow block. They will also catch on fire when they pass through lava.

History
Snowballs were added during the Alpha 1.0.5 update. Before the Seecret Saturday Update 1, you could get more than four snowballs from each block.

As a Crafting Ingredient
In Beta, if 4 snow balls are made into a snow block which you place and then break, the Player will not be able to reacquire it under normal conditions. Instead, the Player will reacquire the four snowballs.

In Minecraft 1.0.0, a new mob created with Snow Blocks and a Pumpkin known as a Snow Golem has the ability to attack hostile mobs with snowballs.

The introduction of Snow Golems gives players another useful way to obtain large amounts of snowballs. Since the Snow Golem leaves a trail of snow in its wake, players may simply hem a Golem in so that it stands in one place (often by building a wall around it or by pushing the Golem into a 1x1x2 hole) and break the snow trail. The Snow will immediately refresh, allowing for an easy farming method to obtain an infinite amount of snowballs.

In that same release, two new mobs by the name of Blaze and Ender Dragon take damage from snowballs, making them the only mobs that Snowballs can currently be used to kill directly.

Traps

 * Snowball pitfall trap:
 * Load a dispenser with snowballs and aim the dispenser at a connected pressure plate by a hole. If something walks across the plate, the dispenser shoots a snowball to knock the intruder into the pit, where they can be dealt with however you like.

Bugs

 * Snowballs do not cause the knockback effect when hitting other players.
 * You cannot throw a snowball at an iron door within a 4 block radius.

Trivia
This can be used as an armor eater due to the bug above
 * Snowballs have a much more limited range than arrows.
 * Like arrows and Chicken Eggs and Spawn Eggs and Splash Potions, snowballs can be fired from Dispensers.
 * The fireball that Ghasts shot were actually flaming snowballs. This, however, was changed in the first Beta 1.9 prerelease, and subsequently Minecraft 1.0.0.
 * Throwing a snowball at someone wearing armor will cause the armor to take damage but not the player. (Tested in 1.2.5)