Your inventory is everything you mine or otherwise acquire in the game. It can hold an impressive amount of stuff!
How to Use
To access your inventory, press the "suitcase" button (upper right on iPad, lower left on iPod) or just press the i key if you're on desktop to show the inventory panel. You can move things from inventory to your hotbar or accessory bar and back by dragging them, and you can look through different categories of inventory by pressing the tabs on the bottom (or on the side in v3).
To see a list of all items organized by inventory category, go to the All Items by Inventory Category page.
Each slot in your inventory holds one type of item, and can display the number of that item up to 999k. The exact number will display up to 9999, and then after that it will display by thousands. If you have more than 999k of an item, the game will still keep count, even though the max that it can display is 999k.
Some items have tooltips that you can view by hovering your cursor over the item. At the time of this writing (February 2016), many tooltips remain incomplete.
If you drag an item from inventory onto a hotbar slot that already has an item in it, the second item will automatically relocate back into your inventory.
In order to use an item in your inventory, drag it into the hotbar and then tap or click on it to select it.
In market worlds, you can drag items directly from your inventory onto other players to give or trade.
If you know you have an item and you can't find it in inventory, be sure to check both your hotbar and accessory bar, as well.
To clear a spot in your hotbar (i.e., have an empty slot), simply drag the item to an empty area in one of your inventory sections. The lighting section has a lot of empty space to work with.
On v3, your inventory displays all your items, even if you have some of them arranged in your hotbar or equipped as accessories.
To remove an item from your hotbar, leaving a blank slot, go to your inventory and find an item that is already in a different slot of your hotbar (for example, your pickaxe). Then drag that item from inventory onto the space you want to clear. You'll see it jump from its original hotbar location to the one you want to empty. Now you can simply drag the pick back to its original hotbar location, leaving an empty slot. Note that on PC it is not possible to completely empty your hotbar of all items.
In the earliest days of the game, inventory didn't have categories, and players could arrange their entire inventories according to whatever organizational schemes they wanted. This system was soon abandoned for a sectioned, self-sorting inventory.
Originally, the game could only display up to 9999 of any one item. As players began to accumulate massive amounts of stuff, they clamored for a way to know how much inventory they actually had, and the current (2016) amount display was implemented.