Ethanol, or ethyl alcohol, is the by product of the metabolism of sugar by certain species of yeast, a process referred to as brewing. It's concentration in water can be increased by the process of distillation. Although it is a colourless, odourless liquid it makes a very good solvent and this is the reason alcoholic drinks have the large variety of tastes they do and particular flavours are drawn out of the brew.
In its pure form (Anhydrous - without water) it is highly toxic. Even in moderate concentrations the body (specifically the liver) has to work hard to break down the ethanol into aldehydes and ketones. These impurities combined with general dehydration (due to Ethanols dieretic effects) are what is responsible for the hangover experienced by people who over indulge.
In high dosages and/or over sustained periods ethanol consumption can causes serious injury or disease. Even moderate consumption can cause non-permanent cirrhosis of the liver. A blood ethanol content in excess of 0.25% is typically fatal, although regular heavy drinkers can tolerate higher blood alcohol contents.
Ethanol is flammable, and burns more cleanly then many other fuels, when fully combusted it will have combustion products of only carbon dioxide and water. For this reason, it is favoured for environmentally conscious transport schemes, and has been used to fuel public busses.