The Fairy Amulet is used to store a Fairy Horse. The amulet removes any armor and/or saddle on the horse before it stores it. Right Click on the horse to store it, then right click on the ground to place it back down. There is a bug in which storing a horse in an amulet will remove the horse's name. If you use a Fairy Amulet on a baby Fairy Horse, then use it again, the horse will emerge fully grown.