Charcoal is the second most efficient fuel for a furnace, after regular coal. It is the most efficient fuel for a kiln, filling 5 fuel slots. Charcoal fills 2 slots on other available crafting surfaces that require fuel to operate (excluding electricity).
Trivia
In real life, people most commonly encounter charcoal in the form of processed briquettes that look like small, dark grey stones used for grilling food.