In order to make ceramic armor or tools, you would need to find clay blocks, and use them to create clay weapons/armor. The catch is, these would fall apart if you try to use them without baking them in a furnace first to turn them into ceramic tools. You could also call them terracotta tools/armor, but people might expect to be able to dye them in that case.
These tools would be the only ones in the game that don't require wood to craft (because wood would burn up in the furnace). Instead, the handle would also be made from clay. I picture ceramic armor and tools as being about half as durable as wood, but also harder/sharper and providing more defense/attack while it lasts. This would have the side benefit of making it possible to craft tools and armor in a desert biome if you can find a suitable river or lake, along with a village that has a library and a blacksmith.
I feel that this adds more of an incentive to explore the surface of the world for lakes and riverbeds (not just oceans) and possibly risk being attacked by Drowners and other mobs early on in the game. I view iron armor as a reward for taking the common sense path of logging and mining until you find enough iron to craft armor. Leather armor is a lesser reward for creating a farm and breeding cows early on in the game, if you go that route instead. I think this ceramic armor could be a reward for exploring enough to find a village and a river/lake or two. It's the explorer's path, rather than the miner's path or the farmer's path.
The way things stand now, wood is really the only resource worth gathering on the surface, especially early in the game (though if you don't care about decorative blocks, this remains mostly true even into the late game). You can get coal, iron, diamonds, gold, lapis, obsidian, etc... all from mining underground. As a result, the terrain on the surface just isn't that important or worth inspecting carefully... all you have to do is find trees in plain sight. I feel that if this were done, it could be another step towards changing that.
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