Hey, a beach!
Sand is a fairly common block, often found near water on new maps. Like gravel this block is affected by gravity and will fall to the lowest solid block in the z-coordinate it is placed in.
History
Sand was removed at revision 0.0.19a, but returned in version 0.0.20a. It was removed due to lack of room in the UI.
A glitch was present in Single Player for quite some time that caused water to flood from blocks affected by gravity if placed against a wall but not on the ground. The bug has since been fixed.