Tombstones

A Tombstone drops when a player on any difficulty setting dies. It can then be retrieved and used much like a sign or a decoration. By default they contain a message about how the player died.

Tombstones can be easily farmed by placing Hellstone or Meteorite directly under the spawn and then creating a new character. The player will die, create a tombstone and then he will spawn again and die again. Alternatively it can be done by digging straight down from the spawn so the newly spawned player will die from Fall Damage.

Upon death, the tombstone will bounce around for a moment and then place itself on a nearby 2x2 free space. Two tombstones cannot land on each other, nor can they be retrieved if they fail to place themselves (e.g., due to lack of suitable space). Therefore, it's recommended to have an open wide and flat area if you are going to farm tombstones.

Variants
If you die with a pet on, you will get a special gravestone. Currently I don't have any pictures so please add one if you have one.