Palette
The palette window is very useful for saving blocks in groups to be used in the future.
The top part of the window shows the 16 previously used blocks. Clicking on one of these blocks will set it as your Active Block.
Creating Presets
The lower part is used to display your saved palettes. Right clicking on this lower half and pressing "Add new category" will present a window to name your new palette category.
After naming your palette, a dropdown with your title with a stone block inside will appear. With the drop-down open, right clicking the stone block will display an option to add a new block or remove that block.
Right clicking on the dropdown when closed will display some options related to the category. Through this you can add to, rename or delete the category.
You can also add to the category by dragging and dropping blocks from the Recently Used blocks.
Using Presets in Other Tools
Tools that paint more than one block type like the Noise Painter support dragging and dropping presets into them.
Tip: Dragging and dropping palettes on a block or selection will replace it with random blocks from the palette.