|“||They went into the farmer’s kitchen, and sat by the wide fire-place. Mrs. Maggot brought out beer in a huge jug, and filled four large mugs.||”|
–The Fellowship of the Ring, A Short Cut to Mushrooms
The mug is a placeable item which can hold many different kinds of drinks. To fill them with a drink, right click on the tap of a barrel of the drink that you want to fill the mug with and then either place it down on a solid block or drink it by holding down right click.
Right clicking on a placed mug will make you drink it's contents instantly. Also, you can right-click an empty vessel with a full one in your hand, or vice versa to transport the fluids to and from each other.
Then smelt them in an ordinary furnace to harden them. The smelting doesn't work in a Hobbit oven, however you can smelt them in a Dwarven forge.
Before Public Beta 29, only the current wooden mugs existed (named 'mug'), but they were crafted by using the clay recipe and then smelting. Also before this update was a very major exploit that allowed the player to duplicate mugs, and as mugs were bought by traders, get infinite coins.