You can get damage from many sources. The damage is represented by your hitpoints as amount of life force you have.
There are many ways to get healed.
Each character heals one point of damage for each starting 50 hitpoints they have each 30 real seconds.
If someone successful uses the heal skill on someone, the recipient gets +1 hp extra/30 seconds for each 10 points total result, until they enter combat or get more damage.
Resting returns currently full hitpoints.
Some of the herbs found heal or make the natural healing faster like Heal skill. Some even heal directly.
Many classes have healing spells, but all types of stored spells like potions are quite rare.
When you go to 0 hitpoints of below, you fall unconcious, but heal normally naturally. If you go below -10 you risk dying. If dead you do not heal naturally and you need to be raised from dead.
If there is someone friendly alive nearby when you go to -10 or below, they will most likely bind your wounds automatically, allowing you to survive.
If you respawn you have one free respawn for each level you raise. Further you get slowly more free respawns for playing time, each “time level” as you can see on the character info page gives one free respawn.
For each respawn after the limit you will get a penalty on xp of 100xp*number of extra deaths. You will also loose 10%*number of extra deaths of your carried money. Further you will loose one reputation point.
Thus a unrealistic but simple example: if you die 2 times on level 1(making your deathcount be 2-1=1) very quickly, the second will cost you 10% money 100xp and 1 reputation point. If you then gain one level, your deathcount will be (2-2=0) meaning next death will again cost you 10% money 100xp and 1 reputation point, instead of 20% 200xp and 1 reputation as would have happened on third death on level 1.
Notes: It is usefull to store your money in the bank as only carried money is subject to the loss.
At higher levels the reputation tends to be the limiting factor and not XP, but ofcourse at that point few reputation points is not going to change matters all that much. This means while the XP loss will be bad, it is possible to recover from it specially with help of others.