Hardmode

Hardmode (Not to be mistaken with HardCORE mode) is a harder version of the initial world. It was introduced in 1.1 patch. You can activate Hardmode for your world by defeating the Wall of Flesh.

Hardmode has many tougher challenges and monsters:
 * You can destroy Demon Altar with the Pwnhammer which causes the world to be blessed with one of the new ores introduced in version 1.1. First destroyed Demon altar blesses the world with Cobalt, second with Mythril and third with Adamantite, next starting from the first, and so on. This can be done only in world which has had Wall of Flesh defeated in it, otherwise the Pwnhammer will act like a normal hammer (and hurt the player).
 * Existing bosses will come back for revenge as The Twins, The Destroyer, and Skeletron Prime (You can still summon and fight the old bosses).
 * Lots of existing monsters will be replaced by harder counterparts (for example, the Eater of Souls gets replaced by the Corruptor). However, this does not mean they stop spawning altogether, just more rarely.
 * The Hallow will appear in the overworld.
 * The Corruption will be able to spread through almost anything. The only known thing it won't go through is The Hallow.
 * NPCs will sell new items. (The Merchant will sell the Disco Ball, the Dryad will sell Hallowed Seeds, the Arms Dealer will sell the Shotgun, etc.).

History
Bug: It seems that some players have seen the Hallow Merge with the corruption.