Rum is a drink that is made by fermenting sugarcane in a Booze Barrel. The sugarcane can be allowed to ferment for up to 24 hours in real time.
You can put up to 32 sugarcane in one booze barrel.
Drinking Rum that has been properly fermented (a pretty long time) will give you good effects, such as Resistance and Fire Resistance. Drinking unfermented Rum (spawning it in, for example) will give you negative effects, such as nausea, poison, blindness, and instant damage.
The death message for being killed by instant damage is "(Name) was killed by magic," so it can be pretty funny to be killed by apparently magical Rum.