We've known that a spin-off from gazillion-selling side-on crafting/fighting affair Terraria was on the cards for quite a while, but seems it ran into some problems. Terraria: Otherworld is set in an alternate dimension from the original, leaned more towards RPG and strategy, and eschewed a pure sandbox structure in favour of a little more structure. That's still the case, but devs Re-Logic have revealed that "Otherworld needed quite a bit of work", and that they've put a new lead designer and artist onto it in order to "bring more 'Terraria-ness' to Otherworld as well as to really make the things that make the game different stand out."
Otherworld's actually a collaboration with another studio, Engine Software, and reading between the lines there's an implication that Re-Logic weren't entirely pleased with how things were going. "We undertook a full in-depth review of the project versus our standards, expectations, and vision for the game. It was pretty clear to us at the time that Otherworld needed quite a bit of work - and even a good bit of rework - in a number of areas in order to hit that mark."
Hence, there are new leads on the project over at Engine Software, and "our two teams have laid out clearly what needs to be done and are pushing forward executing towards that roadmap to deliver the game we expect - and our fans deserve - as soon as possible."
No sign of a release date now, as the focus is on getting the game to where they want it to be first, but there are a couple of new screenshots showing off the Corruption/Purity mechanic, which affects the appearance and behaviour of biomes. They've decided they want those effects to be bigger now, hence:
For the life of me, I just cannot work out which one is Purity and which is Corruption.
A few more details, and an apology for the long silence, can be found here.