Honey

Honey is a Liquid that was added in the 1.2 Update. It is found in Hive biomes, in either a large pool at the base of the hive, small pockets with honey waterfalls, or sometimes when you break a hive block. Honey flows much slower than water or lava, and also slows players and monsters who are touching honey.

Honey Buff
When a player touches honey,  it gives them a buff called "Honey", with the tool tip "Life regeneration is increased". As it's tool tip says, players regenerate slightly faster when in honey. After leaving the honey, players are left with a 30 honey buff.

Crafting
Honey can be crafted into Bottled Honey by standing near it with a Bottle in your inventory.