This item can be found in the glowing water area of Waterfall, seen just after an area where Sans with his telescope, Loren, and the Nice Cream Guy are located. If the bridge to the left of this area is traversed, a small area with a bush in the center can be found.
The Ballet Shoes are located in the bush. Undyne mentions this item to a protagonist in a phone call and says "There's normally a pair of old shoes in that seagrass." She then encourages the protagonist to take them.
When attacking with them, three bars appear instead of one. Hitting a bar exactly in the center causes it to flash gold while missing a bar causes it to flash red. The animation appears to be the bottom of a shoe, as though the protagonist kicks when using the item. Hitting at least 2 bars in the center with the other one close by causes the attack animation to appear golden, which increases damage.