Charcoal can be created by burning/smelting wood as the ingredient in a furnace.
Charcoal was stated by Notch to be a name class edit of coal.
Charcoal can be used for Torches , like normal Coal .
The texture for Charcoal was changed in 13w19a and in 0.8.0 for Pocket Edition. This was so new players wouldn't get confused between the two.
It is more useful to burn logs with coal in a furnace , because each coal will smelt 8 pieces of Charcoal.
The crafting interface in the PS3 edition has two crafting recipes for torches and fire charges , one with coal and one with Charcoal. The two recipes are in the same column of the same section of the crafting interface, and have (coal) or (charcoal) to identify which one is which.