Tar is the product of smelting Bitumen in a furnace. It is used as a alternative to slimeballs, being able to be used in place of a slimeball in a recipe that calls for it, for example, sticky pistons or magma creams. It was hinted that tar might have a use as a fuel source in a later version, but definitely not a sure statement. As of version 1.4.2 it has not further uses as an item.