The Twinkle of Contagion is a substance that Donut owned and used on himself for the challenge in "Four Goes Too Far".
It appears to be a sparkling rainbow liquid substance that can be injected in to a person through a syringe or needle. When someone becomes infected with it, they get a whitish glow. The glow makes them a bit lighter in color. It appears to be a smooth liquid similar to water and not a very viscous substance, as it sloshes around quite a bit.
The effect itself is referred to as simply the Twinkle or, as Gaty called it, the Light. Gelatin jokes with this name and calls it "The Tinkle of Contagion" repeatedly. Donut is offended by this.
If one is infected with the substance, they will appear to glow and make sparkling sounds. The infection is spread when one were to observe at someone with the said infection. The glow then transfers to that person until they get looked at by someone else. If an object currently infected with the Twinkle dies, the glow diminishes from their body. This is currently the only known way to actually dispose of the effect.
Due to Donut's possession of Four's command and factor, the infection could only start spreading after he announced that the challenge began.
If one injects themself with the substance first, they'll never feel any pain even if they normally would. This is evidenced by Donut screaming loudly when he’s reinfected, despite already injecting himself without pain.
It can still spread although the challenge has ended, as shown in "The Liar Ball You Don't Want", as Taco had the twinkle when Clock was the last person to have it by the end of "Four Goes Too Far". This may have happened off-screen over the 2 weeks of work on the episode.