The Trusty Staff's main use is in acquiring the Mercury Djinni Dewdrop. After firing a Fireball at the Djinni, the Djinni will enter the water. The player can enter the nearby house, and present the staff to a NPC. The NPC will use the staff to repair his fishing rod, reel in the Djinni, and allow the player to keep it.
Should the player fail to get the Djinni before the Grave Eclipse, the Djinni will become permanently lost.