Fluid

From the Minecraft Beta 1.7.3 Wiki

A fluid is water or lava: a block that flows out from a source.

Levels

Every fluid block has a level. A source is level 0, and each block of flow is one step weaker than the block it came from. Flow stops where the next step would pass 7.

Water Lava Lava in the Nether
Levels lost per block 1 2 1
Blocks of flow from a source, on the flat 7 3 7
Ticks per block of spread 5 30 30

Fluid falling straight down stays at full strength, and starts to spread again from level 1 wherever it lands.

Flow

Fluid flows down whenever the block below lets it. Otherwise it spreads sideways, but only towards the nearest place within 4 blocks where it could flow down. Where several are equally near it spreads towards each, and where there is none it spreads in all four directions.

When a source is removed, the flow it fed dries up from the source outwards. Each block of flowing lava that would weaken holds on 3 updates in 4, so lava dries up slowly.

What stops flow

Solid blocks stop fluid, and so do doors, signs, ladders and sugar cane. Fluid flows into every other block and replaces it:

Water flowing sideways into these breaks them into their drops. Water flowing down onto them destroys them without drops. Lava destroys them.

Infinite water

A space of flowing water with two or more water sources beside it becomes a source, if the block below it is solid. Lava never makes new sources.

Lava and water

Lava that has water beside it or above it hardens:

Lava Becomes
A source Obsidian Obsidian
Level 1 to 4: the first two blocks of flow Cobblestone Cobblestone
Weaker, or falling stays lava

Water below lava does not harden it. Lava can flow into a space of water and replace it. Water never flows into lava.

Still and flowing blocks

Water and lava each have two blocks: a flowing one, and a still one it becomes once it stops changing. A still block turns back into flowing when a block beside it changes.

Still lava takes random ticks, and uses them to set fire. Still water takes none.

Entities

Water pushes entities in the direction it flows. Lava does not.

Entities in water can drown, and entities in lava burn; see Damage#Environmental damage.