Terraria has a long list of crafting materials that players can use to create many different items to help with quests and battles. Tattered Cloth is a material with one use only- to craft the Goblin Bottle Standard which summons a Goblin Army when used.
Summoning a Goblin Army is useful when farming Spiky Balls or find the Goblin Tinkerer, or in hardmode when seeking shadowflame weapons belonging to Goblin Summoners.
Tattered Cloth is dropped only by Goblin Scouts, an uncommon enemy found at the surface that spawns during regular gameplay who can be detected by the Lifeform Analyzer. Goblin Scouts can be found in the furthest East and furthest West thirds of the world, and only during the day. Goblin Scouts will not spawn in the Corruption or the Crimson. Players will need to kill the Goblin Scouts in order to make them drop the Tattered Cloth. 10 Tattered Cloths are needed to craft one Goblin Bottle Standard so farming Goblin Scouts is recommended.
Related: Terraria: How to Access the Jungle Temple
Players will need 10 pieces of Tattered Cloth combined with 5 pieces of any wood to craft the Goblin Bottle Standard at a Loom. To use the Goblin Bottle Standard one player must have 200 health or more.
Good luck!
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How to Get Tattered Cloth in Terraria