While not a sequel to the original game, Terraria is somewhat more akin to a midquel. Otherworld takes place in an alternate dimension and is expected to vary from the origina, Terraria. The post below is taken from the news section of the Re-Logic website.
Expanding upon the immensely popular action-sandbox title Terraria, exploring what might have been, and approaching gameplay in a new direction; Terraria: Otherworld represents a novel take on the Terraria experience.
Set in an alternate dimension within the Terraria universe, Terraria: Otherworld places the player in a life-and-death struggle to restore a once-pristine world – now overrun by a malevolent force that has corrupted nature itself – to its original splendor. Along with a rag-tag band of survivors, will you be able to successfully harness the power of an array of weaponry, magic, defenses, and even the world itself to thwart the designs of this unseen evil?
Combining the experience of sandbox gameplay with role-playing and strategy elements, Terraria: Otherworld explores the Terraria experience in an innovative and unique way – providing a fresh approach to the “open world” genre.