Enchanted Sword Shrines are terrain features that generate as small caves below the surface. They can generate with a narrow shaft leading into the top of the cave. The cave's background is made of Flower Walls and features a small hill with pools of water on either side. Atop the hill rests a sword in stone as a background object. They generate in the surface or underground layers in dirt or stone terrain.

On the Desktop version Desktop version, Console version Console version, Mobile version Mobile version, and Switch version Switch version, multiple shrines may generate in a world, with larger worlds having a slight increased chance to generate more, although not guaranteed to generate any. They generate in the outer two-thirds of the map, and have a 33% chance of generating a 1-tile-wide shaft leading up to the surface. Upon destroying the background object, there is a 2% chance to drop the Terragrim, and otherwise, will drop the Enchanted Sword.

On the tModLoader version tModLoader version, multiple shrines may generate in a world, with larger worlds having more available. They generate in the outer two-thirds of the map, and always generate with a 1-tile-wide shaft leading up to the surface. The background object has a 67% chance of displaying a junk sword and a 33% chance of displaying an enchanted sword. Upon destroying the enchanted sword in stone, there is a 10% chance to drop the Arkhalis, and otherwise, will drop the Enchanted Sword. Nothing is dropped from the junk sword background object.

More facts here: https://terraria.fandom.com/wiki/Enchanted_Sword_Shrine