Changing the Lighting Mode
If you attribute the lighting effects to bad graphics, you could be using a lighting mode, such as "White or "Retro," that doesn't demonstrate the complete graphical experience. Pressing the "F9" key on your keyboard cycles the lighting mode so you can witness some of the more colorful modes including "Trippy" or "Color."
Adjusting the Screen Resolution
Playing "Terraria" full screen with a low resolution such as 800-by-600 will result in highly pixelated graphics, especially if you have a large screen. Increasing the resolution will smooth out the graphics. Setting the resolution to the highest setting may cause performance issues if your system barely meets the "Terraria" minimum system requirements.
Upgrading to the Latest Version
Instances of bad graphics could be related to a bug and might be addressed in a patch you don't have. Because "Terraria" is a Steam game, you can obtain the latest "Terraria" version automatically by playing the game with an active Internet connection. The patch notes found on the game's Steam page will tell you if the new version fixes any graphical issues.
Playing the Game in a Normal Windows Environment
If you have a Mac, you should play "Terraria" in a normal Windows environment by means of Apple Boot Camp for a bug-free Terraria experience. You could experience some graphical glitches in certain spots like lava areas when playing "Terraria" through a virtual machine or a wrapper in OS X.