Charcoal is a solid fuel used for heating and cooking that is created through the process of carbonisation, which is a process where complex carbon substances—such as wood or other biomass—are broken down through a slow heating process into carbon and other chemical compounds. Generally, the discussion about charcoal is more about the solid fuel used in developing economies rather than the material used in a barbeque in a developed country.
Although the use of charcoal can be detrimental to the environment, and people's health, charcoal is generally a better fuel for cooking than wood. Charcoal stoves tend to burn more efficiently and cleanly than wood stoves. This improvement is nice—but access to better fuels would be healthier.  However, the production of charcoal is important as it provides some level of income for local people who may not be able to find work in other places. Charcoal is the principle energy source, in many poor areas. Since these families don't have a lot of income, charcoal is often one of the largest parts of a family's budget.
Note that charcoal (see figure 1) is different than the briquettes frequently used on barbecues (see figure 2). Traditional charcoal has lower purity than lump charcoal or charcoal briquettes. Traditional charcoal contains mineral sand and clay that is picked up by the wood and its bark, and it contains more ash than the briquettes. Purification of traditional charcoal can be done by removing the ash through a strainer, leaving fragments of mostly good charcoal. After milling this charcoal from the sifting process, the material is put into briquettes. A binder is mixed with the milled charcoal and pressed into briquettes. These briquettes—shown in Figure 2—tend to burn more cleanly, but are also more expensive.
During the production of charcoal, wood is cut down into long, cane-sized pieces and placed in some sort of closed vessel. Generally, wood structures known as charcoal piles are used (shown in Figure 2). Within these piles, the wood is heated in the absence of air (oxygen) that would otherwise allow the wood to ignite and burn away. Since there isn't enough oxygen for this to occur, the wood is forced to decompose into a variety of substances—one of them being charcoal. Other substances besides charcoal are also created, one of them being ash. These products are known as by-products and can be collected for other uses.
As the wood is heated, it absorbs heat and is dried, giving off moisture in the form of water vapour. Once the wood is dry, it begins to decompose, giving off carbon monoxide, carbon dioxide, and other chemicals. When the temperature is raised even more, the wood structure begins to breakdown and charcoal begins to form. At a temperature of 400°C, the wood has essentially become charcoal. Heating beyond this point removes more tar and increases the carbon quantity of the charcoal, improving its quality.
There are both health and environmental issues involved with the use of charcoal as a fuel. The health issues that arise from using charcoal are the same problems that arise from the use of other solid fuels. These health issues, primarily due to the smoke that is produced when the charcoal is burned, includes an increased number of cases of pneumonia, stroke, heart disease, and lung cancer. Overall, the World Health Organization estimates that there are 4 million deaths per year that are partially caused by the use of solid fuels, including charcoal. The shift from using wood to charcoal could have significant environmental issues due to the process that converts wood to charcoal. One primary, concerning aspect of charcoal is that it is produced from forest resources—resulting in the extensive use of forest biomass which could represent a potential issue in regards to environmental harm. Due to the large amount of charcoal that is needed—about 2-3 tins the size of the containers in Figure 1—deforestation could be an issue if high demand is paired with poor forest management and regulations.
In addition to being a health and environmental risk, charcoal is also inefficient and dirty, creating a large amount of black soot. Charcoal stoves have about a 10% efficiency, meaning that 90% of the heat is lost while burning. Because of this inefficiency, charcoal stoves can take up to 30 minutes to heat up, making cooking a long and difficult task. In addition, the temperature of the stove is difficult to control, making cooking a more difficult task.
Access to non-solid fuels can minimize the amount of charcoal a family uses and thus decrease negative health side effects. However, access to these fuels differs drastically across the globe. Below is a map showing the percentage of a country's population that had access to non-solid fuel in 2010. Note that the methodology doesn't distinguish numbers below 5% or above 95% access, which is why Canada is listed as having 95% access.