Common charcoal is made from peat, coal, wood, coconut shell, or petroleum. "Activated charcoal" is similar to common charcoal. Manufacturers make activated charcoal by heating common charcoal in the presence of a gas. This process causes the charcoal to develop lots of internal spaces or "pores." These pores help activated charcoal "trap" chemicals.
Activated charcoal is commonly taken by mouth to treat poisonings. It is also used for intestinal gas (flatulence), high cholesterol, hangovers, upset stomach, and bile flow problems (cholestasis) during pregnancy.
Activated charcoal is applied to the skin as part of bandages for helping heal wounds. Source: WebMD