Rarity

Tier 0 (White)
All basic items fall under this category. These are mostly building materials. Items that are white are not necessarily worthless, and could be a good source of income early on, as with turning glass into Bottles you can make a hefty profit and make good use of tier 0 items.

Tier 1 (Blue)
Weapons and armor made of Demonite are tier one. Certain accessories such as Shackle and Lucky Horseshoe are also tier one. Certain uncraftable weapons are tier 1 such as the Ball 'O Hurt.

Tier 2 (Green)
Tier 2 items are largely uncraftable, with the exception of Necro Armor and the Star Cannon. Muramasa, Vilethorn, as well as other spells like Water Bolt are tier 2.

Tier 3 (Orange)
Weapons and armor made of Hellstone are tier 3. Certain uncraftable weapons and accessories are tier 3, such as the Staff of Regrowth, Rocket Boots, Feral Claws, Flower of Fire. These items are rare and usually found later in the game.