Prism Shards are hardmode quest items used for the Holy Absolution quest.
When you start Holy Absolution, the Wizard gives you Crystal Visors. Equip them before farming in the overworld Hallow, otherwise the Nostalgic Shards will not be properly visible or targetable.
Nostalgic Shards also appear during the Empress of Light domain encounter, but for the quest itself most players will gather their 10 Prism Shards from Hallow farming after starting the quest.