Six major open cut coal mines and one underground dot the landscape surrounding the town and provide its main employment opportunities. The town is also situated close to the Blackdown Tableland National Park which lies to the southeast and Blackwater coal mine located south of the town. Emerald is 74 km to the west.
Blackwater is supposedly named after the Blackwater Creek which apparently was first observed to flow with black water, this may have been caused by tree roots growing into the creek. Coal deposits were discovered there by Ludwig Leichhardt in 1845.