While in the ground, coal looks similar to flint. Coal looks like black, squiggly ovals. Coal in an inventory, however, looks like just one single squiggly oval.
Where Found
Deposits of coal are common underground, where stone is found. It is more common near the surface of the world. Prior to version 1.4, coal could be warped in from the portal. Many players mistook flint for coal; they look very alike, but coal cannot be found within dirt
Crafting
Coal is required to convert an iron ingot into a steel ingot in a furnace or electric furnace, taking two in a normal one and one in an electric one. Prior to version 1.4, crafting steel required five coal.