Do items in Terraria despawn?
Yep, items in Terraria can despawn but it takes a while! If there are more than 400 items lying around, the game will start despawning the oldest ones to make room for new drops. So, if you dropped your shiny new sword and forgot where, you better start retracing your steps before it goes poof!
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Tbh, it's rare to hit the cap. Just pick up your stuff regularly, and you'll be fine. Remember, only dropped items despawn. Placed blocks and furniture are safe.
Short answer: Yes. Long strategy: Don't litter.
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