The Ice Mirror is an item that allows almost instant teleportation back to the world's spawnpoint or to the player's Bed (if the spawn point is set). It is found in Ice Chests, the chances of finding one are 20%. The item has a short delay of about one second; during this time, the player is susceptible to damage.
To many players, this item is considered one of the most important items in the game, as it allows the player to get out of tough spots very quickly.
Using a Ice Mirror while the "Horrified" debuff (which only happens naturally while fighting the Wall of Flesh) is one of the ways that causes the player to explode, giving the unique death message "[player's name] tried to escape".
Simply exiting the world and reloading it can be used as a substitute for the Ice Mirror, though this has the downside of taking longer and causing all items which were on the ground to de-spawn.
Since teleporting with the Ice Mirror takes some time, the player can still die while doing it.
It can be used to teleport to the Nurse (If the player has set a spawn point in their room) for quick healing.
There is an alternative version of it called the "Magic Mirror". The only difference is the way it looks and the name.