The Redstone Torch is an item which is used as a power source for wires and as a result can be used to sabotage/activate traps and mechanisms as well as opening locked iron doors making it useful for raiding parties in multiplayer. Wires in turn are used to operate a Stone Button, a Lever, or a Pressure Plate from a distance. It turns off when any adjacent switch, lever, or pressure plate is turned on. The torch can only power the wire for a length of 15 blocks.
The Redstone Torch will constantly power a set of wires, and is used as a "block-based" switch sometimes. Using it as a source of light is not reccommended because it has only a third of a regular torch's light output and the Redstone is much harder to find than coal.
See Redstone circuits for more information on using Redstone torches in circuits and logic gates.