Bucket

Buckets are tools, used for carrying water, lava or milk. Water and lava buckets can only be obtained by using the bucket on a source block; shallow, running fluids cannot be collected. Milk buckets are collected by right-clicking an empty bucket on a Cow or a Mooshroom.

If one is under water and moving forward, filling an empty bucket will create a momentary air pocket. This is enough to refill the player's air meter, allowing them to stay under water indefinitely. To reuse the bucket just dump out the water.

Buckets can be crafted from iron, or found in dungeons. There is, approximately, a 53% chance of finding one bucket in a dungeon chest.

Usage
Water buckets can be used to extinguish fires in an emergency, and to drain and fill lakes. Buckets can also be used as a diving tool. By pointing directly down and filling the bucket the player will be surrounded by air for a short time, thus filling the player's air meter.

Water that is used in a bucket can clear out tall grass on small fields. It is useful for collecting seeds and clearing the area for building. The water can be picked back up when the water has been used. This bucket could also be used to make farms where you could grow wheat, and other items. Another usage is filling a cauldron with a water filled bucket. This allows the filling of glass bottles for making potions.

Types of buckets

 * Water bucket - holds one water source block
 * Lava bucket - holds one lava source block
 * Milk bucket - used to make cake. Milk can be used to cure poison and immediately stop potion effects.

Trivia

 * While underwater, holding an empty bucket and right-clicking will create a temporary pocket of air  around your head for long enough to recover breath. If there is a block within your reach, you can empty the bucket by right clicking on that block and repeating the process, allowing you to stay underwater for extended periods of time.