Sponge general info
Sponges are decoration blocks that have no other uses. In the upcoming 1.8 update, they are given ability to absorb water in 5x5x5 area and a new variant, wet sponge.
Currently they are obtainable in creative mode or via /give <name> 19 command.
Before 1.8 sponges are used only for decoration.
Upcoming info about sponges
Starting from version 1.8(14w25a) sponges have 2 variants: dry sponge and wet sponge and a new ability to absorb water in 5x5x5 area. Their texture has also changed and they are again obtainable in survival mode.
Dry sponges turns to wet sponges after drying an area. Wet sponges are darker, full of water and unable to soak up more water. They can be dried in a furnace with any fuel. If you put a fuel so it starts burning, then replace the fuel with an empty bucket, after the process you will get a dry sponge and a bucket full of water. The most efficient way to use sponge is to start at the top and go down; sponges placed at the bottom will just result in water flooding the cleared area.
Sponges cannot be crafted and they spawn only in Ocean Monuments.