Mineral Water is a turquoise liquid that can be found in natural Caves on the Stalactite layer and in oases within Canyons, but it can also be created by players by purifying Corrupted Water either by placing Healing Beacons into it or throwing Purification Bombs at it.
This useful Liquid heals over time as long as your character touches it, and the healing effect will last for 2-3 seconds after leaving the Mineral Water.
It seems that player characters can breath in Mineral Water, since no drowning scale will show up and characters cannot drown when staying under Mineral Water, but they will slowly float up just like in ordinary Water and most other liquids.
Uncorrupted Creatures also cannot drown in Mineral Water, but Corrupted Creatures are hurt and eventually killed by its purification effect, just like they take damage from Healing Beacons and Purification Bombs.
Mineral Water will not freeze in most cold areas, since it requires extremely low temperatures to freeze - like when Freeze Bombs hit Mineral Water, or it is placed onto a snowy mountain at a high altitude.
It seems that Mineral Water has a base temperature of 10 F, which becomes apparent when you place it into cold environments. But it will usually warm up when being placed into warmer biomes and adjust itself to the same temperature.
How to obtain
Mineral Water can be found in the shape of lakes oases within Canyons and in natural Caves on the Stalactite layer where it often forms pools and rarely also low cataracts. Sometimes, cataracts of Tar will meet with Mineral Water.
You can multiply Mineral Water infinitely by placing a drop on the ground and only scooping up the offsets, not the source/core you placed (just like you can do with any other kind of liquids too).
How to use
Mineral Water can be placed and stepped into so it can serve as a healing pool.
Mineral Water can also be used for watering Crops (the block with the liquid has to touch the tilled land with the Seeds at least corner-to-corner). Different to what ingame tips claim, moisture is not necessary for tree Saplings to grow.
Even though Mineral Water is quite resistant against freezing, all Seeds will still stay fallow if the temperature of the air / the whole biome is too cold for Crops to grow.
Mineral Water can also be used as elevator when digging directly downwards from the surface from within a small pool of Mineral Water; even safely down to the deepest layers. In that way you can "climb" up again without any extra-work and no need to place ladders or so, by just swimming upwards in the falling Mineral Water again, as your character cannot drown in Mineral Water.
Mineral Water can be frozen to Ice by throwing Freeze Bombs at it. It might melt quickly again in warm to hot biomes though. Often, this Ice will not turn into Mineral Water in this case, but into common blue Water instead.
You can also use Mineral Water (like ordinary Water) as sort of a safety sheet to jump in from high up; only 1 block of Mineral Water (or any other liquid) is enough to catch your character's fall and keep him/her from dying.
Please note that touching Mineral Water will not make the corruption scale go down or away, but Healing Beacons can drop the corruption scale if a player-character touches a Healing Beacon directly (like standing on top of it).
Neither will Mineral Water cool player characters significantly on the Lava layer, so it will not help against the heat scale that will eventually deal burning damage over time.
Purification of Corrupted Water
If you purify Corrupted Water by throwing Purification Bombs at it, this can transform up to 7x7x7 (usually only 7x7x5 though) units of Corrupted Water into Mineral Water. By placing Healing Beacons into Corrupted Water, it will slowly turn into Mineral Water drop by drop too, but normally only up to 3 blocks horizontally and downwards, and 2 blocks diagonally, so much less Mineral Water than Purification Bombs can create.
Mineral Water can kill Corrupted Creatures if they touch the healing liquid for too long. Nowadays Corrupted Creatures drop Loot Bags when dying from purification. This includes Th'ang that can randomly be summoned by Infused Haunted Idols (Halloween-specific items that immediately initiate a combat event when placed).
Since there is no "purification spreading sim", Mineral Water itself cannot purify Corrupted Blocks not Corrupted Water by touch.
Mineral Water will not harm uncorrupted Creatures. In fact, Mineral Water can even heal all uncorrupted Creatures over time just like player characters. Additionally it can sometimes keep night Creatures alive in the sunlight if they should happen to get stuck in Mineral Water somehow.