|This article is about an older version of DF.|
Dwarves will not turn milk into cheese unless you allow milk to be "cooked" in the Z-Status kitchen subscreen. This obviously causes the milk to be cooked into meals too if cooking is under way at the same time.
Cheese can be eaten as is ("raw") and seems to vanish at incredible speed from your food stocks.
Cooking dwarven cheese creates incredibly valuable prepared meals, since dwarven cheese is the most valuable ingredient known (hydra and dragon meat has the same value, but are not exactly a renewable resource).