The torch emits a smoke particle effect if exposed to the sky. If a block/ceiling is above it, the particle effect will not appear. The particle effect appears if there is a light or easteregg over top. There is also no collision.
You can only remove a torch by placing a block over it, and then removing the block that was placed. But the sound remains until you Quit To Title, then reload the world.
This block was released on April 8, 2011, with the release of the game.
- Torches were the first light source other than Electric Light.