Coal

Coal lumps are items mainly obtained by harvesting coal ore blocks. Their main uses are as a fuel or crafting torches.

Charcoal is an alternative to coal obtained from smelting wood. It can do everything coal can, except be traded with villagers or crafted into a block of coal. Coal and charcoal also cannot stack together.

Obtaining
The main difference between coal and charcoal is in the methods of obtaining.

Mining
Coal ore mined using a pickaxe will drop 1 unit of coal. If the pickaxe is enchanted with Fortune, it may drop an extra unit per level of Fortune, up to a maximum of 4 with Fortune III.

Wither Skeletons
A wither skeleton may drop a coal lump upon death.

Natural generation
Coal can be found in stacks of 3 to 8 in the chests in stronghold store rooms and in minecart with chests in abandoned mine shafts.

Fuel
When used in a furnace as a fuel, a coal lump or piece of charcoal lasts 80 seconds (8 operations).

Coal and charcoal are also the only fuels accepted by powered minecarts. They provide approximately four minutes of transit each.

In Pocket Edition, in survival, if you put charcoal in a furnace you may be able to stack coal on the charcoal, and the coal with automatically change into charcoal. This also works backwards.

Trading
Villager fishermen, armorers, tool smiths and weapon smiths buy 16-24 coals for one emerald as part of their first tier trades. Butchers buy 16-24 coals for one emerald as part of their second tier trades.

Data values
Coal and charcoal share the same ID name, which is, but charcoal has a data value of 1.

Video
Note: The video does not show a crafting recipe for blocks of coal. This was before blocks of coal were added in 1.6.1.

Note: The video states that charcoal looks the same as coal. This was before 1.6.1, when charcoal's texture was changed.