The Fairy Bell is a spell introduced in the 1.1 patch. When used, it summons a fairy which follows the player and emits light, similar to but faster than a Shadow Orb, although the light that it gives off is brighter and has a larger radius than the Orb.
The fairy summoned will have a random color of pink, light green, or light blue and will follow you until the buff has been removed either by death or by canceling it. It is free to cast and can be crafted at a Mythril or Orichalcum Anvil.
Only one fairy may follow each player at a time.
The color of the fairy can be changed by using the Fairy Bell a second time.
The fairy summoned will look like a pixie but just a smaller one.
With the Hero Outfit, you can use the Fairy Bell to act like Link from the series mentioned above.
The color of the fairy is completely client side, other players may view the color of it differently than you. However if you summon it while off of the other player's screen, it will appear as the correct color.