Potions provide buffs to your character - typically for a few minutes at least - which can greatly affect the power of your character in combat. This is especially notable when battling bosses, as the combined stats of several potions improves your character in combat. There are also potions that speed up mining and provide light, and these being regularly available will help immensely. While the potions you find from chests while adventuring can be saved for important moments, it's even better if you can brew your own via a placed bottle or Alchemy Table (PC-only for now) so that you can have an infinite supply. The ability to grow plants is key here, so there is a separate guide to Gardening Plants in Terraria that may help you with this process. You may also enjoy The Best Boss Battle Potions. This guide's focus is to get newbies up to speed on the requirements to brew potions.
Getting Started with Alchemy
The process of making potions requires a few things of you. Here is a list of the materials you will need to get started. It's specific in order to avoid undue confusion given the amount of choices in Terraria.
Bottles - you need one bottle placed on table if you do not have access to the alchemy table. You can make a cup, or other item to hold liquids, but since you need bottles anyway you will probably want to just use glass for this. Go find a desert biome on the surface of your world and lower its elevation some by harvesting a big stack of sand. Glass bottles are produced from sand, using a Furnace. First you make the glass, then form it into bottles using the Furnace for the second step as well. Two sand makes one glass, which turns into two bottles - so you basically will have one bottle per sand block in your inventory. 999 bottles of potions will last a very long time, so you don't need quite that much. Start with 200 at most.
Place one Empty Bottle - Until you can get an Alchemy Station, you simply need one of the bottles placed on a workbench - that's all! Put it on your hotbar and place it like any other object, only on top of the table. This is just giving your character something to mix the plants with in order to make a potion. This placed bottle turns the workbench into an alchemy crafting area while keeping its original function.
Bottles with Water - To actually make a potion, you need bottles filled with water. Simple! Take your stack of bottles and go stand in some water. You can bring up the crafting menu and fill all of them in one go, all without affecting the water level. For every potion you make, you'll need one of these bottles so it's good to make many at once in order to knock one ingredient off the list.
Plants and other Materials - Now you just need to grow/harvest the herbs and other things you need to make each potion. Standing near the bottle on the table will let you access potion crafting.
PC Terraria 1.3 Only: Alchemy Table
An Alchemy Table is often found in the Dungeon, which can be explored once you've got some defense and decent damage and have defeated Skeletron in order to gain access. Why can't you just buy or craft this? It's special. Using an Alchemy Table as opposed to a placed bottle gives you a 1 in 3 chance of not using any materials when you make a potion. This means your materials go much further, allowing you to make even more potions with your harvests. You should take on Skeletron and defeat him before moving on to Hard Mode so that you have an Alchemy Table if you're interested in making lots of potions like I am. Once you have taken one home by hitting it with a pickaxe to 'harvest' it, the game will automatically choose the Alchemy Table as opposed to the placed bottle when you go to make a potion, should they both be near to one another.
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