Potions grant buffs, restore health or mana, or enable utility like recall and safe mining. Brew them at a Placed Bottle or Alchemy Table from bottled water and herbs.
Stand near a Placed Bottle or Alchemy Table with Bottled Water and the herbs/ingredients for the recipe. The Alchemy Table has a chance not to consume ingredients.
For bosses, stack Ironskin, Regeneration, Endurance, Lifeforce and the class-damage potions (Wrath/Rage). Recall, Wormhole and Mining potions cover utility.