Mad Milk is a replacement for the Scout's secondary weapon slot. In many ways, it's similar to the Sniper's Jarate. When thrown, the bottle will smash open upon contact and any enemy caught in the splash will be covered in milk. Anyone on the team of the Scout that threw the milk that shoots a coated enemy will heal 75% of the damage dealt from each shot.
Just like Jarate, Mad Milk will reveal cloaked enemy spies, extinguish flames on teammates, and the effect can be ended prematurely by jumping into water or using a resupply cabinet.
Mad Milk can be acquired by crafting Jarate with Reclaimed Metal, purchasing it from the in-game "Mann Co." store, or waiting for the item to drop into your inventory automatically.