2How to craft it
when it is worth crafting
This is the filler arrow of the early game. The burn it applies is short and does not land often, so most of the value is that it costs almost nothing and lights up wherever it hits, which makes it a passable scouting round when you are already exploring dark caves with a bow in hand.
Once you have found the Snow biome, stop making them. Frostburn Arrows take the same kind of effort and hit harder. Once Jester's Arrows or Unholy Arrows are affordable, stop again, because there is no comparison.
the water problem
Contact with water, honey or Shimmer snuffs the arrow out mid-flight. It keeps traveling and keeps its base hit, but the fire and the light are gone. Fighting around a cavern lake, or in the flooded parts of the Jungle, quietly turns a good share of your ammo into plain wooden arrows without any warning.