Fall Damage

The Fall Damage Equation
When your character falls more than 25 blocks, you will take damage based on the additional number of blocks fallen, assuming the impact isn't arrested in some manner. Every block above 25 that is fallen means an additional 10 damage, minus defense. So if you fall 60 blocks with 0 defense, upon impact, you will take 350 damage.

Thus the fall damage equation is:

10 * (v − 25) − ||(d / 2)|| = f

v = Blocks fallen prior to impact, values below 25 aren't valid.

d = Character defense

f = Fall damage

|| Signifies that this should be rounded to the nearest whole number.

Example: I fall 50 blocks with a defense of 21:

10 * (50 - 25) - ||21/2|| = f

10 * 25 - 11 = f

250 - 11 = f

f = 239 damage from falling!

Canceling Fall Damage
The three main ways to stop falling damage are using environmental factors, slowing or halting the fall, bypassing the fall and equipping an accessory that negates fall damage.

Bypassing the fall involves environmental factors to negate falling damage include falling into water, lava or cobwebs. All of these slow your fall without registering a falling impact, resetting the 25 block minimum fall distance before damage takes place. Falling onto a different source of environmental damage (any of the fire-block types without fire protection, for example) will also reset the falling distance counter.

You can avoid the fall damage by activating your double jump or rocket boots, or having wings equipped. Grappling Hooks, Ivy Whips, and Dual Hooks also stop the damage from occurring if you successfully grapple onto something.

The Lucky Horseshoe and Obsidian Horseshoe are accessories that fully negate fall damage. The Angel Wings and Demon Wings allow the wearer to fly, and they also grant the same effect as a Featherfall Potion.

Note that, although it visually slows your descent, being knocked back by a monster during the fall does not prevent falling damage.

If you use a Magic Mirror while falling and you are RIGHT about to hit the ground, you will hit the ground, but warp at the same time. You won't get a "You were slain..." Screen but you will still Warp to your spawn with only 100 Life and half of your coins will be dropped on the point where you fell and warped at the same time.