Terraria 1.2.4 added a fishing mechanic. I have a few questions on how it works exactly:

1. What types of "critters" can be used as bait? So far I've seen that worms, grasshoppers, and fireflies work.
2. What determines whether my bait is consumed? I occasionally catch junk (seaweed, old shoe, etc), and my bait count stays the same. I've even had this happen when I catch a fish.
3. What does the "fishing power" stat for bait and fishing rods control? How often fish are caught? The value of what is caught? Something else?

2 Answers

1. Any critter that is an insect can be used as bait. This includes worms, fireflies/lightning bugs, butterflies, grasshoppers, and scorpions. I generally go for worms followed by fireflies, based on how common they are while still having a decent bait %. One variety of butterfly is as good as Master Bait (50%), but it's rare.

2. Bait consumption is a random chance separate from rod and bait %'s. There is an accessory (Tackle Box) which reduces bait consumption chance, and I think there's also a potion that does the same thing.

3. Bait % is added to the rod's power %, similar to bows' damage being combined with the arrows' damage. The combined value affects your likelihood to get a higher-rarity fish and how quickly fish bite. I think some of the rarest fish are unobtainable without a high-power rod and/or high-value bait.

I highly recommend using a Sonar Potion while fishing. It tells you which fish is on the hook, so you can let the Bass just keep on swimming. It's crafted from bottled water + waterleaf + coral at a table with a jar on it.

It's worth noting that some fish are fished out of honey and lava instead of water, so give that a try, too!

1. I have used grasshoppers, worms, butterflies, and fireflies. There might be others as well, but I'm not sure.
2. I think I read somewhere that the bait power is its chance to not be consumed upon a catch. IE higher bait power means it stays around longer.
3. I was trying to learn about the fishing power as well. My pure guess is that it is more likely to catch the rarer fish. (I have no idea though)