2Dropped by
Used to craft
Tinkerer's Workshop
worth finding, not worth wearing
By the time you are down in the underworld killing fire imps, obsidian skin potions and a Lava Charm are both realistic, and either of those stops lava damage completely rather than trimming it. As a defensive accessory it arrives after the problem it solves has already been handled.
keep it anyway
It is a step toward Lava Waders, which are in turn part of Terraspark Boots, and those hold a slot for the rest of the game. That is the actual reason to farm imps for one.
the ash wood exception
Pairing it with Ash Wood armor gives outright immunity to lava, which is a genuinely strong combination for anyone who wants to build down there before better gear exists. It still spends any lava immunity timer you are carrying from other sources, so it is not a free pass stacked on top of a charm.
Do not bother wearing more than one, or wearing it alongside something crafted from it. The reduction does not compound. Imps spawned from a statue also drop it at a small fraction of the natural rate, so that farm is not the shortcut it looks like.