Clay Ball

Clay is the item received after mining clay blocks. These clay balls can be placed in a furnace to make clay bricks or recombined back into blocks for storage or building purposes. Mining a clay block yields 4 clay, which can be placed back together, much like snow. Clay can be found near water and looks similar to stone but has a softer and lighter look.

Crafting
Clay can be placed in a furnace to create clay bricks. These bricks then can be crafted into brick blocks.

Trivia

 * Prior to the Beta 1.2 update, clay was more rare than diamond because it generated in fair sized clumps few and far between.