See Damage Numbers - Simple Beads on sticks make a computer

The abacus is an item useful for keeping counts and making calculations by moving small beads along a stick, where a bead kept to the left or right might mean a count being kept, and sliding the bead to the other side being a sum or subtraction. In game, this is a passive item that gives the player more information during combat encounters.

This item has numbers pop out from enemies when the player hits them, this number being the damage that was just dealt to said enemy, this lets the player know how much damage they are doing with their attacks and could be useful to let them make up different strategies and attack patterns.

This behavior can be toggled off in the Pause menu.

The item can be found in Treewish Forest after the first Goliath. After getting past him, the player has to walk farther a little more then drop down when they have the chance, instead of continuing to the right, they have to get over some crates and walk to the left and under the platform they were just on, where they will find the Abacus in a small room by itself.