All of the animation is hardcoded into the game itself rather than being driven by the assets themselves. (hardcoding the amount of content that Terraria has is generally a terrible idea if you have non-programmers who want to add content - but hey, they shipped a successful game and made a ton of money, so shows what I know ).
Terraria is hardly a shining example of game development and the fact it "shipped" and made a lot of money shouldn't really detract from that.
I would advise not looking too closely for inspiration from a game that boasts every item in a giant file, ever entity in a giant file, a function for every single piece of dialogue in the game.. in each language in one giant file.
You could write a book about Terraria's code. There are games out there with a LOT more skill put into them that don't ever come close to the popularity of Terraria, like Minecraft, some games will just defy the general standard.