Glass Flasks can be used for a wide variety of things. Their main usage is for dyes and potions. More than that, they're for combat and farming also. Water-filled flasks are mixed with various ingredients to create different types of orbs. This includes combat-focused orbs like the Gaseous Orb, which unleashes a poison cloud. You can also make Demon Fire Orbs and Grease Orbs. Grease Orbs are considered essential in breaking open Star Metal meteors, so being able to make those is important when you reach the Star Metal phase.