The Candle is a 1-block tall block used primarily to emit light. It has a light level between 8 and 14, compared to a torch's 14, and can only be placed on the tops of blocks.
The candle is primarily a decorative block. It does not provide light as well as a torch does, but offers a different style of decoration and a more homely feel to your builds.
In Renewed Snapshot 1.2 candles were modified so that up to 4 candles can be placed on one block (similarly to how turtle eggs work in vanilla). This increases the light level emitted by 2 each time a candle is added, up to a maximum of 14 (the same as a Torch).