What does sleeping do?

Sleeping does not:

• fast-forward time
• fast-forward any processes such as crops growing or furnaces melting/cooking

Sleeping does:

• change the time of day to the next morning, if every player sleeps at the same time
• set your spawn point so you will respawn next to that bed, after 5 seconds whether or not other players sleep

Sleeping has one documented effect: Changing the time of night to the beginning of day. Furnaces burning when you hit the hay have not jumped ahead, potions are still brewing as if time had not passed, and as far as I know, crops continue to grow at their own rate.\

I am personally unsure about one other affect, and that is rain: some people claim that sleeping will shut off the rain, however I personally have never been able to get sure results.