Terraria (Wiki): Umbrella

The Umbrella is a melee weapon that pierces enemies and functions exactly like the Tragic Umbrella, except for dealing less melee damage.

The Umbrella is a held object that hovers above the character and makes it possible for them to fall more slowly than usual. The player can hold the Down key to go descend more quickly. The Umbrella's effect does not stack with the Featherfall Potion, since it provides the same effect.

The Umbrella works really well when you're falling fast horizontally, like when you're riding a Minecart at its maximum speed. If you ride off the end of a suspended Minecart Track while holding an Umbrella, you can travel really far in a straight line. If the track is high up, you can even travel halfway across the map. An Umbrella cannot autoswing. Its attack reaches three tiles in radius. At an optimal distance, the Umbrella can pierce two enemies. However, multiple bodies will be damaged should they all line up for the player.

When normally used, the Umbrella will not emit light, and attacks do not go through walls. The player's fall will no longer be slowed for the duration of the attack when using the Umbrella to attack while in midair. 

One can switch to another object and then back to the Umbrella just before hitting the ground to hasten their fall even more. Another method is to attack while in midair (desktop, mobile, console).

The Umbrella does not have to be held out for the entire fall. It can be removed just before it touches the ground and will still negate fall damage right away (desktop, mobile, console).

The Umbrella is very helpful when combined with a jump-enhancing accessory (like Cloud in a Bottle) and other accessories that increase the height of jumps.

Combat-wise, the Umbrella could be quite useful in combat due to its large hitbox in the early game. Even though it has a weak knockback, it can be effective against small groups of enemies with low health. All Flask items will imbue their unique effects since the Umbrella is a melee weapon.

Attacking enemies while floating down to them using the Shield of Cthulhu (desktop, mobile, console) is possible. Even though it is an Umbrella, the Angry Nimbus is unaffected by it. The Umbrella can save a life in the event of unexpectedly long falls if it is kept in the Hotbar for easy access.

The Umbrella is best modified with Legendary for overall stats improvement.