Lava is capable of killing the Spelunker and all enemies on contact. If a lava pit is too wide to jump across easily, try knocking out the side of the pit with bombs to reduce the lava's level. Ropes that unfurl into lava will burn from the bottom up.
Objects dropped into the lava will sink slowly. If you accidentally drop an item into the lava, it may be possible to retrieve it provided you're fast enough and you dropped it close enough to the edge of the pit. However, destroying the wall supporting the lava, attempting to drain the lava, may result in the item sinking to simply float in mid air, irretrievable (unless hit with a well timed bomb to send it flying). Push Blocks dropped into lava can provide a temporary stepping stone.
Almost all enemies will die on contact with lava, and corpses will slowly burn and sink.