Empty buckets can be used to "pick up" a water or lava source block by pressing use item on a block of the relevant type. If the empty bucket is part of a stack and the player's inventory is full, the filled bucket drops in front of the player as an item.
A bucket filled with a source block can then be used to place its source block contents in the empty block next to the side of the block the player is currently looking at, or replacing the block looked at for some replaceable blocks.
One can press use when looking at a cow, mooshroom, or goat to fill a bucket with milk. A bucket full of milk can be emptied only by drinking it or by using it in crafting a recipe (like cake).
An empty bucket can be used to collect powder snow, filling the bucket with powder snow. Emptying the powder snow bucket places the powder snow block in the empty block next to the side of the block the player is currently looking at.
An empty bucket in the fuel slot now fills and become a water bucket after a wet sponge is dried. This happens for empty buckets placed by the player while the furnace is still smelting, and for empty buckets left by lava buckets.
Stacked buckets in the fuel slot now become a single water bucket.
Using a bucket on water or lava in Creative mode now provides the player with one water or lava bucket in the inventory. This is created in a new inventory slot rather than replacing the used bucket. A limit of one bucket per fluid can be obtained this way - attempting to fill a bucket where a filled one already exists in the inventory removes the fluid as expected but does not provide any new buckets.
Cows and mooshrooms can also now be milked in Creative mode, providing the player with limitless milk buckets.