A Bunny Puff can be obtained by killing a Bunnyman or by deconstructing a Rabbit Hutch underground with a Hammer or Deconstruction Staff. Bunny Puffs are not dropped by Rabbits.
Bunny Puffs are used to create the Fur Roll and the Rabbit Hutch. They can also be traded to the Pig King for two Gold Nuggets each and fed to Pigs to befriend them. Pigs and Spiders will eat Bunny Puffs on the ground