1How to craft it
Work Bench
where one belongs
Anywhere the interruptions are the problem rather than the enemies. Long build sessions, tunneling through the cavern layer, sorting chests in a base that keeps getting visitors. Holding it counts as well, provided it is the item currently in your hand, so the same candle works as a portable version while you dig. Add a sunflower and a Calming Potion on top and the surface goes properly quiet.
the trade
It cannot tell an enemy from a butterfly. Everything that spawns is cut back, so a candle burning near your fishing spot will starve your bait supply without you noticing. Put it away before a bait run, and remember to switch off any you have already placed.
wire it
Placed candles toggle on a right click or from a switch, so one wired to a lever lets you flip a room between quiet and a working spawn farm without re-mining the furniture. That is the setup worth building: candles in the living area, all on one circuit, killed the moment you want the farm running.
against a water candle
The two cancel out exactly in normal conditions, which is handy if you want to farm in one room and live in the next. The exception is Space, where the water candle's effect is scaled up so far that this cannot pull it back down.