Terraria got a large update today that adds new features and fixes many bugs. The full patch notes can be found below.

Terraria 1.2.4 Patch Notes

Features and Mechanics:

• You can now get quests from the Angler NPC for cool rewards. Each time you complete a quest, the rewards progressively get better.
• You can now use critters as bait for fishing.
• You can now ride around in style on the new Minecart system.
• Beaches no longer feel so empty.
• Truffle Worms now spawn in hardmode Mushroom biomes. Be wary using this bait near the Ocean.

• You can now place weapons and tools on the craftable Weapon Rack. (Thank you Goryō for your suggestion!)
• Added Smart Cursor. This can be toggled using control and has an interface option. Smart Cursor makes digging, chopping, placing, and breaking much faster and easier.
• You can now craft stone letters and numbers with a Heavy Workbench.
• Lihzahrd Powercells drop more commonly from enemies in the temple.
• Rain is now red during a Blood Moon.
• Updated Gemspark tiles to make the inner border complete.
• You can now place coins to create Coin Piles. (Thanks Omnir!)
• Added several new underground cave wall graphics.
• Moss backgrounds have been updated with new textures.
• Replaced grass graphics for when they are surrounded.
• Grass is now killed when a player covers it in solid tiles.
• You can now find shark statues in worldgen , they spawn sharks when there's enough space.
• It is now much more likely that you will spawn on a flat clean surface when creating a new world.
• Added some world gen cleanup to remove small segments of floating blocks.
• Worms now spawn when breaking rock and dirt piles.
• Grasshoppers can now be found when you cut grass.
• Rainbow Bricks and Brick Walls now go through the entire spectrum.
• Hives are now more common.
• The Abeemination no longer requires Obsidian, Crisp Honey, or a Demon Altar to be crafted.

Pixel Piracy Crossover Content:

• Falcon Blade.
• Pirate Minions.
• Placeable Sail “wall” sold by the Pirate NPC.
• Placeable Pixel Piracy painting.
• Ginger Beard vanity item.

Items:

• There are now 22 new potions you can craft from fishing and/or shiverthorn related materials.

• There are now 5 new mounts to help you traverse the terrain.
• There are several new pets including the Mini Minotaur (Thank you Tobuscus)
• You can now craft couches out of silk+material. (Thank you Eikester for the 20 you contributed)
• Dressers and Pianos have all been given custom graphics. (Thank you Eikester)
• You can now craft Grandfather Clocks out of more materials.
• Over 100 new furniture items have been added to complete old furniture types.
• Trees in the Ice Biome now drop Boreal Wood.
• You can now craft furniture out of Boreal Wood.
• Queen Bee,King Slime and Pirate Invasion now have larger loot tables.
• There are 6 new summoner weapons.
• There are now 2 new summoner armors.
• You can now craft Molotov Cocktails out of Silk+Ale+Torch.
• The underworld and Dungeons have more furniture from new world creation.
• You can now craft Gemspark Walls.
• You can now craft Tin Plating tiles and walls.
• You can now craft Confetti tiles and walls.
• You can now craft Midnight Confetti tiles and walls.
• You can now craft Waterfall tiles.
• You can now craft Lavafall tiles.
• Living Fire Blocks now drop from enemies in hardmode Hell.
• Updated Glass Wall item sprite.
• Added fireworks box (wirable and placable , you can also use it by right clicking)
• Added Firework Fountain.

New Music:

• Underground Crimson

Optimizations:

• Wiring system runs at least three times faster. Longer wire systems get larger gains.
• Improved multiplayer performance.

Bug Fixes:

• Fixed bug where the last bucket of a stack wouldnt go into an available stack when used.
• Fixed bug where buckets don't stack together by themselves when dropped in the world.
• Fixed bug where Gemspark Blocks wouldn't merge well after being actuated.
• Fixed bug where "The jungle grows restless" message would appear before you have beat all 3 Mech Bosses.
• Improved readability of two of the guide's tips as per complaints.
• Fixed bug where Truffles had a hole in his shop if you didn't meet a requirement.
• Changed the Quick Heal to use the best fit healing item instead of the first.
• Fixed a bug where only one wire attached to a Lever would work when you flipped it.
• Fixed exploit where you could dupe pets with Bug Net in multiplayer.
• Fixed bug where spawn rates would increase underground when a moon event is happening.
• Fixed bug where Crimsand Blocks would attempt to enter ammo slots on pickup by themselves.
• Fixed bug where Flask of Gold would apply Ichor debuff on enemies rather than Midas debuff.
• Fixed the crash when a chest is placed above but not directly on a Boulder.
• Fixed bug where Mana Crystals wouldn't immediately fill the new Mana Star they give when used.
• Fixed bug where Well Fed granted 10% magic damage and no ranged damage by mistake (was most likely a typo , magic damage 5% twice , 1 of them near the ranged crit boost).
• Rudolph no longer flies the moment he touches down if the jump button is held.
• Fixed a bug where Rudolph could sometimes regain the ability to double jump while flying.
• Dressers , Pianos and Tables no longer emit particles when struck - you're not breaking them.
• Fixed a bug where Glass Walls were not drawing to the map properly.
• Fixed a bug where the background was showing through some Stone Slab parts.
• Fixed bugs with the sign / npc chat display again.
• Fixed bug where tile wands did not consume items if you had high tile placement speed.
• Fixed bug where breakable pots wouldn't drop life and mana when you weren't at your max if you had temporary increasers.
• Fixed bug where other player's pets would disappear after a while (in multiplayer).
• Fixed a bug that could cause the Minimap to crash the game.
• Fireworks now show the wiring layout when selected.
• Fixed bug where watches show 2 ':' marks when displaying time.
• Wooden fence types now properly let the sunlight through.
• Updated graphics for Chairs and Tall Torches to fix some issues.
• Fixed a bug where bad item stack sizes could cause the game to crash when saving.
• Fixed an alignment issue with Pearlwood Chandelier.
• Actuated tiles no longer remove the water over them on world load.
• Fixed bug where minions on multiplayer would disappear after a while.
• Fixed a bug where buff tooltips were staying visible on the map screen.
• Fixed the name for the Hoppin' Jack NPC.
• Fixed issue where minions would not sync upon spawning them in multiplayer.
• Fixed grammar issues with magic quiver tooltips.
• Fixed issue where Death Sickle and Vampire Knives would not animate properly on other players in multiplayer.
• Fixed issue where Scorpions worked with King Statue and Travelling Merchant did not.
• Fixed the exploit where you could have infinite Hoverboard hovering time.
• Invasion summon items will no longer be consumed if no invasion would happen using it.
• Not destroying a Shadow Orb at all will no longer block Natural Pirate invasions.
• Painted walls show up properly on the map.
• Fixed issue where holding binoculars with mouse would still move your camera , making it annoying to move them to chests and the likes.
• Fixed bug where you couldn't dye the Flying Carpet accessory.
• Fixed exploit where you could buy and sell stackable items for profit.
• Fixed bug where glass would not let sun through properly.
• Fixed bug where wings wouldn't work after getting out of water with Merman accessories equipped.
• Fixed a bug where you would die on entering a world from fall damage.
• Fixed exploit where you could duplicate buckets on Mannequins.
• Purification Powder now says 'cleanses the evil' rather than 'cleanses the corruption' (to make it crimson compatible)
• Fixed bug where magic missiles, drills and dirt rods would not function properly in reverse gravity.
• Fixed bug where the player would float when standing between a downwards slope and a halftile.
• Fixed bug where close dropped wires wouldn't merge with each other.