Minecraft wiki entry for Development, associated text: General
Added fog when changing render distance, replacing the old empty chunk system.
Online saving temporarily disabled.
Grass texture has been changed and is now one block shorter.
Levels
You can now select world sizes: Small, Normal and Huge.
Blocks
Water
Now flows faster than before.
Now flows from world border.
You can now select and build with water. [2]
Was disabled in the final release.
Reference
[2] Rotab's IRC logs, May 26th, 2009 (UTC+2)
"(15:45:28) <taodih> notch will we be able to use water as block? [...] (15:45:35) <taodih> in build mode? [...] (15:46:45) <@Notch> taodih: I already can in 0.0.14, but it's DANGEROUS"