The Key of Light is an item which, if put in an empty chest, it will turn that chest into a Hallowed Mimic.
Unlike Mimics spawned using the Mimic Statue, the created Mimic will drop items from its loot table. While this makes farming Mimics more efficient, it also is very dangerous, as the player will begin the fight within contact range of the Mimic.
When storing the key, it must be put with any other item in the chest. If the other item is removed, the chest will turn to a Mimic when closed. The easiest way to do this is by putting a dirt block in the chest.