2what it is for
This one blows nothing up. It freezes water into ice inside its blast, leaves terrain untouched and does no damage to enemies at all, so it is a building tool in the shape of a bomb. The Demolitionist starts stocking it at night once a first boss is down.
getting the most ice per throw
Water does not have to fill a tile completely for it to freeze, so the trick is to spread a little water thinly across a wide flat area and then throw one bomb into the middle. A bucket or two becomes a proper sheet of ice. On Skyblock worlds, where every drop is accounted for, that difference is enormous. Tiles already holding a block or a piece of furniture get skipped.
handling it
It detonates the instant it touches the surface of any liquid, so throw it from dry ground at the pool you want frozen rather than lobbing it across a lake. Thrown from underwater it waits until it has left and comes back down. Shimmer bounces it, but each bounce eats into the fuse, so it does not travel far that way. It is also slightly fatter than a full block and will not fall through a one-tile gap.