From Envirowiki

Charcoal is vegetable matter that has been burnt in the absence of oxygen.

Charcoal can be used for dental hygiene (indigenous australians used it in some regions), as well as for filtering water (when in it's powerdered form)

Charcoal is also used as an additive to poor soils, to increase the carbon content, and the bio-mass content of the soil. One example of this is terra preta, or black soil.

there's a tutorial for making charcoal here: making charcoal