Experience

An experience orb

Experience can be gained when a player kills a mob, uses a furnace, mines, fishes, breeds two animals, trades with a villager, or collects experience orbs from a bottle o' enchanting.

Behavior
Experience is acquired by collecting small color-changing green and yellow experience orbs (see above image) that appear when a player kills a mob, uses a furnace to cook or smelt something, mines any ore that drops a resource rather than the ore itself (namely coal, redstone, diamond, lapis and emerald ores), fishes, breeds two animals, trades with a villager, destroys a monster spawner, or collects experience from a bottle o' enchanting.
Experience orbs will follow the player until the player either collects them or travels more than 5 blocks away from them. Experience orbs can be both washed away by running water and slowed by cobwebs.
Experience orbs, once collected, will add to a player's experience, shown by a green experience bar just above the hotbar slot. Once enough experience has been gained, the experience bar will fill up and the player will level up.

Usage
Experience can be used to enchant an item using an enchanting table or to repair or rename an item using an anvil. In order to complete such actions, the player must have a certain level of experience (the necessary level varies). Once the action (enchanting or using an anvil) has been completed, the player will lose a small amount of experience.