The Golden Bug Net is a random quest reward from the Angler. It breaks grass and flowers, and instantly captures any insects / critters captured this way, mainly worms and grasshoppers. Compared to the normal Bug Net, it is larger, faster, and can destroy any tiles that weapons can destroy, such as grass, flowers, vines, etcetera. However, it does not deal damage.
When combined with the Flower Boots, you can constantly farm bait forever since the grass and flowers will regrow.
The Golden Bug Net is a direct upgrade to the regular Bug Net, which can be purchased from the Merchant.