Minecraft wiki entry for Development, associated text: Additions
Flowers and mushrooms.
Viewport bobbing.
Changes
New level generator.
More cliffs.
Longer and narrower caves
The deeper you go, the bigger the caves are.
Currently selected block shows up in view.
Leaves now drop saplings.
Saplings now grow into trees.
Mobs now spawn in groups.
Mobs and player can push each other around.
Breaking log drops 3-5 planks blocks.
The player can now hold their breath underwater for up to 15 seconds.
Lava now does damage.