It appear the answer to this question is: "It deletes your character".
It was a softcore character (because I'm a complete wimp), so I didn't see that one coming.
I'm going to be starting again from scratch, it seems.
With any other game, I'd probably be upset. Well, truth be told, I'm still kind of upset. But at least I get to do it all again in Terraria.
I've decided to delete all my worlds, too. That way, it's a clean slate. I'll start from the ground up.
Yes, this has nothing to do with anything, really. I just wanted to share what just happened. I might keep a running commentary, but probably not.