So, I only bought Terraria less than a week ago, and I am really happy because I am loving the game and I am learning fairly quickly, so here is my question. Can items despawn in Terraria? This would be good to know, if ever I decided that hardcore difficulty was a good idea. I know that monsters, and even bosses can, but hopefully dropped items, including coins dropped upon death won't ever despawn over time. How does this mechanic work?
Yes they despawn. My friend and I were playing and died, really far away from our base. We spent a long time trying to go retrieve our items, we saw them on the ground as we got closed, managed to pick it up sometimes, but died again. After a while when we got close again, it had disappeared. So yes they can despawn.
After some research I discovered it's not time based, it's based on other items around. There's a limit to that, once it's reached things start to disappear.
So If you drop your stuff and need to get it back, try not to cause too many other items to appear in order to slow down the despawn of the items you care about.