The Microwave was added as part of The Kitchen Update (See also Blender, Cookie Jar and Kitchen Cabinet. Edit
The Microwave is a block that cooks food fast. Only one food item can be inserted and cooked at a time, however, so it's efficient, but time-consuming.
To use, simply put a potato or piece of raw beef into the Microwave and click the start button. Currently, only potatoes and beef can be cooked in the microwave.
You can use the RecipeAPI to add your own custom recipes to the microwave.