While in the ground, coal looks similar to flint. Coal looks like black, squiggly ovals. Coal in an inventory, however, looks like just a lopsided pentagon (a square with a triangle on top).
Where Found
Deposits of coal are common underground, where stone is found. It is more common near the surface of the world. Before version 1.4, coal could be warped in from the diamond portal. Players have made the mistake of thinking flint was coal; they look very alike, but coal cannot be found within dirt
Coal can also be bought from the trade portal
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.