To make terracotta in Minecraft, you must smelt clay in a furnace. The process involves gathering clay blocks and placing them in a furnace to create terracotta. Terracotta in Minecraft is a versatile material that players can use for various purposes, such as building structures, creating decorative items, or even crafting colorful glazed terracotta blocks. With its unique appearance and durability, terracotta adds a touch of creativity and style to the game.