Dispenser

A Dispenser is a special block available since Beta 1.2. When right-clicked, a menu allows you to place items inside it. Each time the block receives power from a redstone circuit, a random item from its inventory drops out. Dispensers resemble furnaces, but the two blocks have different uses and crafting recipes.

Unlike chests, when a dispenser is destroyed, the items inside are gone forever. Notch has stated that this is a bug:.

Crafting
When placed, the dispenser faces the player (it will dispense items towards where the player is standing).

Dispensing
Most items placed in a dispenser will simply be ejected as items and land 2-4 blocks away if on level ground. Arrows, eggs, and snowballs that are stored inside the dispenser are instead fired out (as if they were right-clicked in your inventory). Arrows fired from a height of 2 above level ground will go anywhere from 10 to 21 blocks away. Arrows will cause damage (and cannot be picked up, like arrows fired by skeletons); eggs and snowballs break with all the usual effects. In addition, any projectiles shot by the dispenser do not knockback the mobs that it hits. It is unsure whether this is a bug or not.

Unlike most other redstone-triggered devices, it may be triggered by redstone wire placed up to one block adjacent to it as well as running directly into it; therefore a single redstone wire can trigger up to 5 dispensers in a cross pattern. This allows for easy creation of large walls of dispensers.

It seems to be like items in the top left corner come out the least often, and the bottom right is the most common. This could be useful for slot machines.

When a dispenser dispenses an item, it emits a clicking sound and a puff of smoke. If it is empty when activated, it emits a slightly higher-pitched click.

A dispenser will work if it is placed underwater, even without any blocks touching it by placing a redstone torch underneath it. Also it can be properly wired by placing the redstone in a tunnel underneath the water.

If the face of the dispenser is covered by a block, and the dispenser is facing west or south, fired items will pass through the block. This will soon be fixed.

Probability distribution
Items in a dispenser aren't dispensed uniformly. Items in the bottom-right slot are dispensed much more often than items in the top-left slot. This appears to be due to an oversight in the code.

To find the current erratic probability distribution, first list all non-empty slots in this order:

Then pick the column for that number of slots in the following table. The numbers underneath are the approximate probability that the corresponding slot in the list is picked.

The probability that an item is picked from a stack does not depend on the size of the stack. That leads to some stacks running dry long before others (as far as the nonuniform distribution didn't do that already), consequently exacerbating the abrupt changes in the distribution. However, you can cancel these effects to some extent by sizing stacks proportionally to the table, at the cost of being locked to a fixed distribution. The expected time a stack runs dry will be about the same for each, ensuring the dispenser is actually out of 'rare' items in the top left instead of favoring them once the 'abundant' stacks run dry.

If the distribution were uniform, and took stack size into account, none of this awkwardness would exist. It would still be possible to influence the distribution by having more or less of a particular item in the dispenser. In fact it would allow any distribution, versus the fixed one from the table. Additionally, the distribution would reflect actual availability, preventing the dispenser from turning its distribution upside down when it turns out 'abundant' items run out before 'rare' ones do. It has the property that the items coming out are an equiprobable permutation of the contents.

It appears Mojang is not currently aware of the oversight in the item-picking code (which looks like it was meant to be uniform, though not accounting for stack size, except a counter is incremented in the wrong place), or the suggestion to flatten the distribution. Check out the post at Get Satisfaction, which was also linked to above.

Trivia

 * The Dispenser uses the same texture as the Furnace on all sides except the face, which has a unique texture.
 * Interestingly, the texture file for the dispenser menu is named "trap.png", possibly because it was originally designed for making arrow traps.
 * It is possible to make a very simple dispensing mechanism by attempting to place a stone button on the floor in front of a dispenser. Because the button cannot go on the floor, it will default to the dispenser, creating a dispenser which can simply be clicked to receive items, but cannot be tripped by mobs.
 * If a redstone torch is placed directly above, below, or adjacent to the dispenser, the dispenser will fire twice every time its powered and un-powered by another input.
 * If a redstone torch is placed on one side of the dispenser, and a redstone wire on the opposite side, the dispenser will activate.
 * You can use dispensers to delay Redstone circuits by intervals of five minutes, hook up a pressure-plate to an i/o reverse then to a dispenser and put a item onto it. when the item vanishes then the Redstone charge will change state

Dispenser