Animation menu > Bone Options
The Bone Options dialog lets you treat objects as bones. Any object can be displayed as a bone object, just by selecting the object and clicking Bone On/Off. Here you can also control whether the bones will be rigid, or will stretch. There are tools to realign the bones and reset the stretch.
Most of these options are also available in the Object Properties dialog.
Interface
Bone On\Off: Controls the display of the object as a bone. Select any object and turn this on, then in the Display panel, in the Link Display rollout turn on Display Links and Link Replaces Object. The bone will be visible instead of the object.
Auto Align: Automatically aligns the bones.
ReAlign: Pressing this button points the selected bone back toward the correct direction, if it has become unaligned and is pointing away from the next bone in the chain.
Reset Stretch: Returns the bone to its original length.
Freeze Length: Determines whether the bone's length can change.
Caution: When you turn on Freeze Length, this has no visible effect unless you transform the child of the object to which Freeze Length is applied.
When Freeze Length is turned off, the radio buttons below it control how the bone can stretch.
Scale: Lets the bone scale. The stretching happens along one axis.
Squash: Lets the bone squash. The bone gets fatter as it gets shorter, and thinner as it gets longer.
None: No stretch takes place.
Show Link :Displays the link.
Show Links Only: Link replaces the object in the viewport display.
Update Selected: Updates only the selected bones with the dialog settings.