Divine Confetti is a Quick Item found in Sekiro: Shadows Die Twice and is used to increase your damage against spirits and apparitions. When applied to your weapon, Divine Confetti adds a purple glow and will dispel effects from enemies if they're hit multiple times. It is invaluable in fights against certain enemies such as the Headless mini-bosses and Shichimen Warriors.
You'll find a certain amount of Divine Confetti as you play: some enemies will drop it and you'll find more as you explore. It's also worth remembering that once you reach a certain point late in the game, you'll be able to purchase infinite Divine Confetti for 300 sen a piece. If you don't want to wait until then, there is a place where you can farm this item fairly early on.
Where to farm Divine Confetti
You'll have access to this farming location once you reach Ashina Castle and unlock the Upper Tower—Antechamber Idol. The blue-robed samurai that you'll find in this area have a higher chance than most of dropping Divine Confetti, though the drop rate is still fairly low.
You have a few options here. You can either work your way from the Antechamber Idol all the way to the Dojo Idol, killing all blue-robed enemies you encounter. Or if you prefer, you can pick off two or three enemies—or however many you feel comfortable with—before resetting them by resting at the Idol.
It should be noted that, while the above area seems to be the most effective place to farm Divine Confetti, you're still at the mercy of RNG and results will vary greatly. You can increase the chances by using a Mibu Possession Balloon and The Most Virtuous Deed skill may also help. Some players have reported that using the Demon Bell to increase the difficulty also increases the drop rate, though this is still unconfirmed.
Nine Divine Confetti you may have missed
If you're further on in the game and only need to grab a few extra Divine Confetti but you haven't yet unlocked them at the merchants, there are a couple of locations which yield multiple pickups.
You can find three in the Bodhisattva Valley area. From the Idol, make your way to the cave with the Giant Serpent (where you find the Dried Fruit). There is a grapple point above and to the right of the statue here; grapple up and follow the path to find three Divine Confetti.
You can find six more at the Mibu Village in Ashina Depths. Five are found near the beheaded Buddha statue, close to the drinking NPC and another is found inside a house just before you reach the Water Mill Idol. Later you are able to buy Divine Confetti from merchants, though the cost is high.