This allows for interesting dye/hair dye colors, effects and combinations. If the dye has effects, like the Bloodbath Dye, for example, will give the player the special effects (your hair will have blood drip from it, in the Bloodbath Dye's case).
The Familiar Wig, on the other hand, will change the appearance of the player's hair, when dyed.The colors shown when wearing the Familiar set can be changed using a Dresser instead. All vanity items will benefit from dye, except for the Familiar shirt and pants.Strange Dyes have varying degrees of visibility in complete darkness.
Note that Strange Plants only begin growing in Hardmode. Dyes with a rarity level of Orange or Cyan can only be awarded in a Hardmode world even if strange plants are somehow obtained in pre-hardmode.
These dye are given as quest rewards by the Dye Trader in exchange for Strange Plants.