An Arthana is a ritualistic knife used by witches and warlocks to both collect special ingredients and to perform some rites. It has the same properties as a golden sword, but has the durability of an iron sword. It can be repaired with a Gold Ingot.
The main purpose of the dagger is to collect specialist ingredients used in Witchery, and will dramatically improve the chance of a mob dropping such ingredients. It also gives a small chance of undead dropping Spectral Dust.
The dagger gives a very small probability for head drops (from mobs and players). It does not change the drop chance for Wither Skeleton Skulls.