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Bones can be acquired by slaying skeletons, or by mining bone block, which can be found in the nether.
As a crafting ingredient
By placing 1 bone into any crafting area you will get 3 bone meal, which quickens harvest and/or growing time for plants and trees.
In large 3x3 crafting area, place 5 bones in an "X" shape; one bone in each corner and one in the center.
You will get 8 shurikens.
Trivia
Bones can be used to tame wolves, but it will take more than one bone to tame the wolf.
