In a nutshell, Terraria is a game that's kind of like 2D Minecraft, in a sense. There's a bit more of an RPG take to it though, there are monsters, bosses, and other fun stuff like that. Long story short, it's like the 1.8 Minecraft "Adventure" update done right.
There's singleplayer and multiplayer for it, I'd definitely recommend the multiplayer. I've spent the better part of the last few days on a server with some RoTbros and it's been incredibly fun.
It costs I believe $10 on Steam (assuming you buy it of course). Other info such as system requirements are available here: http://en.wikipedia.org/wiki/Terraria
Here's some screencaps of some fun stuff my friends have built in the past days:
http://screensnapr.com/e/6x5k7e.png
As well as a penis, which I was advised against posting here.
I'll have some of the actual houses tomorrow.