Water Candle

Two things, and the second one gets forgotten. It raises how often the game tries to put an enemy in the world, and it raises the ceiling on how many can be alive around you at once. On a farm that is already saturated, the ceiling is what buys you more kills per minute. The area it covers is wide enough that one is normally plenty, and a second adds nothing on top of the first whether it is placed or in hand. Holding one only counts if it is the item currently selected in your hotbar. Sitting in your inventory it does nothing at all.

The dungeon keeps them on its shelves, and you can steal a few long before you have any business being in there. The outer rooms are reachable ahead of Skeletron if you set a bed just outside, since the Dungeon Guardian will kill you but the retries cost nothing but time. After that a Crystal Ball lets you make as many as you want.

Every candle the dungeon generated with is working against you the entire time you are inside, which is a large part of why the place feels so much heavier than anywhere else at that stage. Switching them off as you pass, or mining them and pocketing them, makes a clear run noticeably calmer and you leave with the candles in your bag. Placed ones also answer to wiring, so a farm can have its spawn rate on a lever instead of being permanently on.

Invasions and the moon events run their own spawn logic and ignore it, so a candle does nothing for the pace of a Pumpkin Moon or a goblin army. Blood Moons and solar eclipses are different, since those draw on normal spawning, and a candle does raise what comes at you during one. It lifts critter spawns as well, which is why a couple of them around town is a quiet way to keep bait supplied. Your town NPCs still suppress hostile spawns nearby, so you get the fireflies and the worms without the fight that would normally come with them.

Take one to the top of the world and the effect is roughly five times what it manages at ground level. That is easily the best place to use one and a large part of why sky farms are built the way they are. It also breaks the usual rule about the Peace Candle. Normally the two cancel out completely, but up there the peace candle only trims the increase rather than erasing it, though it does still remove the bonus to how many enemies can be on screen.

On top of the general increase, it weights the roll toward a short list of targets rather than lifting everything evenly. Unicorns and Wyverns turn up close to twice as often, which is the fast route to a Blessed Apple or a stack of Souls of Flight. Martian Probes are the extreme case, with a multiplier several times over, and it climbs again once you have already cleared Martian Madness, so repeat runs of that event are far less painful with a candle out.

Battle Potions add on top of it, and that pair is the default setup for grinding any rare drop. A peace candle anywhere in range cancels it, so check you have not left one lit near the town you are farming next to. It also works underwater for both light and spawns, which matters more than it sounds when you are trying to farm something that only lives in the ocean.