Charcoal

Charcoal was an addition to Minecraft in version Beta 1.2. Smelting Wood in a furnace creates Charcoal, which can be substituted for Coal in all uses, including making torches, powering minecarts, and smelting objects. This will undoubtedly make it easier to survive your first night as it allows the player to make torches much more easily, as no coal needs to be mined in order to craft torches anymore. Charcoal does not stack with Coal. Charcoal and Coal look exactly the same and cannot be changed with a texture pack as the texture is shared between the two.

Efficiency
It is more efficient, though time-consuming, to turn wood into charcoal for smelting than to use wood for smelting. Ordinarily, a wood block smelts six items if broken into planks: each wood block makes four wooden planks, and each wooden plank smelts 1.5 items. However, one wood block can be smelted into one charcoal block, and each piece of charcoal smelts eight items, just like coal.

Therefore, it is more efficient to take seven wood blocks, turn one wood block into planks, and use those four planks to smelt the other six unbroken wood blocks into charcoal. Those six charcoal can then smelt 48 items. Ordinarily, seven wood blocks would only smelt 42 items, since seven wood blocks makes 28 planks. This process thus gives a six-item smelting increase over using planks for fuel. It does, however, require waiting for the six wood blocks to become charcoal.

Moreover, if you begin with a single coal or charcoal, then you can smelt 8 wood blocks and make 8 charcoal, replace your starting charcoal and keep the other 7, making for a total of 56 smelts from those 8 wood blocks, though there is even more time required for smelting the wood.

Trivia

 * Stated by Notch in a livestream, charcoal is just a name class edit of coal, explaining why it functions like coal.

Coal
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