Ice is a raw material which can be processed into oxygen and hydrogen.
Ice has a distinctive look and comes in many forms. It can be found on planets, moons and asteroids in the form of regular solid ice. Some planets and moons also have ice seas (Note that there are no water seas in Space Engineers as of now). In certain biomes ice can also be found in the form of snow on high mountains or covering the environment.
An Oxygen Generator is used for processing ice into oxygen and hydrogen. The different conversion rates (speed and resulting volume) are listed on the page of the generator.
Usually small amounts of ice are enough to power the player's Jetpack and the Medical Room. Large to huge amounts will be necessary when multiple large hydrogen thrusters are used in high gravity or on large ships.
Like all raw materials, ice can be transported through a small conveyor system.