two ways to play together
Host and Play runs the world inside a normal copy of the game. One person starts it, everyone else joins by address or through Steam friends, and the world closes the instant the host leaves. Right answer for an evening with two friends, wrong answer for anything you want to still exist tomorrow.
A dedicated server runs the world as its own program with no graphics and nobody attached. It stays up whether or not anyone is online, the host can restart their own game without dropping everybody, and it hands whoever runs it a console for kicking, banning, saving and setting the time of day. On mobile the same split appears as local and online, with local capped at eight players.
turning on pvp
Nothing hostile happens by default. PvP is a per player toggle, the crossed swords beside your armor slots, and both people need it on before either can hurt the other.
The exception covers anything that is not technically a player attack. Traps, lava, boulders and land mines damage everybody regardless of the toggle, which is how most accidental multiplayer deaths actually happen.
teams and what they share
Picking one of the five colored shields puts you on a team and the white shield takes you off again. Teammates get a permanent readout of each other's distance, direction and health, and they show on each other's minimaps, which other PvP players do not.
Two effects carry a fifty tile radius. Anyone inside that distance of a teammate holding an information accessory such as a PDA or Cell Phone reads the same data off it without owning one, so a single player can carry the whole group's readouts. Accessory luck spreads the same way and does not stack, so a second lucky player adds nothing. One secret world seed gives each team its own spawn point, visible only to that team.
how combat changes
Damage from another player grants far less invulnerability than damage from an enemy, roughly 0.13 seconds against the usual 0.67. That is about eight ticks, so any weapon with a use time under 8 is swinging faster than its target can be hurt and the surplus hits do nothing. Very fast weapons quietly lose a chunk of their listed output the moment you aim them at a person.
Critical hits do not occur in PvP and weapon specific knockback is ignored. That rewrites the modifier question: with crits off, anything improving critical chance is dead weight, and for a weapon whose speed cannot be improved further, Ruthless wins because raw damage per hit is all that is left.
Two more catch people out. Nobody drops coins when killed by another player, which includes blowing yourself up with your own explosives, counted as a player kill even in a world with nobody else in it. And you respawn at full health instead of half, unless what finished you was a debuff from another player's weapon.
capture the gem
The built in PvP mode is capture the flag played with gems. Each team needs a large gem, crafted from fifteen of any one gem type, so a Large Amethyst works as well as a diamond and the choice is cosmetic.
A carried gem hovers visibly above its holder, so nobody sneaks one home, and it always drops beside whoever was carrying it when they die regardless of that character's difficulty, so a hardcore player cannot deny the other team a recovery.
what more players change about the world
In Classic nothing scales except invasions. A boss has the same health for six players as for one, which makes multiplayer the simplest way past a fight that has been stopping you.
Expert and Master do scale. Boss health climbs with the number of connected players and invasions need more kills. That is aggressive enough that a fight can be harder with four people than alone, especially if some turned up undergeared.
Loot moves the opposite way. Everyone who dealt damage gets their own Treasure Bag, so a group that all contributed walks away with several sets of expert drops from one kill.
The mechanism misfires in a way worth knowing. Involvement is tracked by connection slot rather than by person: slot zero is whoever joined first, and damage marks the slot. If a player who hit the boss disconnects and somebody else takes the freed slot, the newcomer inherits the mark and collects a bag for a fight they never saw.
things you can only get here
Team Dye and Team Hair Dye tint to whichever team color you are on, so there is no way to obtain them alone, though they keep working in a solo world afterward. Wormhole Potions only drop from pots in a multiplayer world, can be crafted anywhere, and need a teammate to travel to, so they are effectively multiplayer only whatever their source.
Almost no gear is designed around other players. The Paladin's Shield is the clear exception and it is built for cooperation rather than fighting, taking a share of the damage aimed at nearby allies.
One thing to accept before you start: you cannot pause. The ability only returns once every other player has quit.

