Its description in Creatures 1 was Ingested from fermented fruit, hootch etc. Causes drunken gait and possible sickness, etc. Causes much the same effect on norns that it has on humans... The default genomes had a sex-linked effect - males would become slightly angry and sleepy from alcohol, whereas females would become slightly amorous and sleepy.
A cure for alcohol in C3/DS is Dehydrogenase - however, as this causes pain by default, not many players use it, preferring to let their creatures 'sleep it off'. While the Creatures Exodus Creation manual implies that alcohol can damage the liver (p.41), there is no evidence for this in the default genomes.
In C3/DS, alcohol can also be produced as a side effect of a bacterial infection.