Terraria is an amazing 2-D block game, similar to Minecraft, where you build shelters and hide from monsters (zombies) that spawn at night... but is a bit different from Minecraft. While it's awesome, you don't get as many options when creating structures, so most things look the same or are very basic, unlike Minecraft where you can create massive, unique and pretty structures. Instead, Terraria focuses more on the action and role-play characteristics of the game. There are masses of rare items that can be found, dozens of different enemies to fight and giant boss-fights! One of the first bosses you'll likely fight will be the eye of cthulu, which fires dozens of tiny eyes at you, and tries to eat you. It's incredibly fun, and can be bought off steam for $10. It's best to play with friends over voice-chat though!
Loads of fun, I still prefer Minecraft because I love building things though. Terraria has be said to be better than Minecraft by some review sites, but I find it hard to compare the two, since Minecraft is all about creation, and Terraria is all about action.