The Lantern will provide the most light of all the mobile light sources. It does require you to carry it in your hands if you want to move it around but it can also be placed on the ground for light so that you can interact with the world. In effect, it is something of a cross between a Pumpkin Lantern and a Torch.
The Lantern has to be refueled as it is used but it will last for up to 8 minutes (or one in game day) without being refueld. Adding Light Bulbs will give you an additional 90 seconds or so while Slurtle Slime will give you another 45 seconds. As the fuel dies, so will the radius of light given off so keep on eye on that and make sure to refuel before the light goes out completely.