Bone Meal is crafted out of skeleton bone and is used for dying wool and as a fertilizer.
Bone meal can be applied directly to a sheep to dye it white. It can also be added to various other dyes in order to create new colors, or combined with wool already dyed to convert it back to plain old white wool.
When applied to planted wheat or saplings, one unit of bone meal is consumed and the wheat or sapling will grow to their full size instantly.
Bone Meal can also be applied to a grass block to instantly create tall grass, and possibly some flowers, on and around the grass block.
Recipe / Source