HEALTH (HP) can be thought of as the amount of damage that your body can take. Health is displayed as a red bar over each character and also in the lower-left corner of the screen near their portrait. When your health drops to zero, you don’t immediately die. But any more damage and you will die. That does give you a chance to potentially recover some health through an ability. Take note that this also applies to monsters. Once you see their red health bar disappear, it takes another hit to actually kill them.
There is an exception to this that can kill a character or monster “in one blow”. That is when an attack does both physical damage and elemental damage (e.g., fire, ice or shock). If the physical damage reduces their health down to zero, the subsequent elemental damage can then kill them.
Note: An option is available in SETTINGS to override this and allow players and creatures to die whenever their HP drops below zero, without requiring the extra hit. Uncheck the Final Hit to Kill checkbox to enable this.
Characters start with 20 health plus 1 point per Strength over 8 and 3 points per Constitution over 8. You also gain 5% per level. Additionally, there are skills that can boost your health. There are also temporary positive and negative effects that can boost or lower your health.
Unlike stamina, you don’t just recover health over time. Either healing abilities (like First Aid) or camping and resting will recover health. Returning to town will also restore all health.
Characters also have a MAXIMUM HEALTH, sometimes referred to as RAW HEALTH. This is the white line that is on your red health bar in the lower-left corner of the screen near your portrait. This line caps the health that you can have at any time, and the red bar cannot go beyond it. This is very important because you cannot recover health beyond your maximum health while on an expedition. The only way to recover it is back in town, where it recovers automatically.
A portion of any physical damage taken will reduce your maximum health. For normal attacks from melee or ranged weapons, this can vary from between 20-50% on any given hit. For example, in the figure to the right you can see in this COMBAT LOG that the character took 0.2 HP of damage. They also sustained 0.1 of that as “raw” damage, which was 50% of the base damage (the part in parenthesis, deducted from maximum health).
Damage from elemental 
attacks as well as some abilities which drain health reduce maximum health by 100% of the damage dealt. So, in our figure you can see that the Flaming Arrow also did 3.9 fire damage. In this case, the elemental damage displayed in the COMBAT LOG does not show a “raw” amount in parenthesis because it is 100% of the regular amount. The elemental damage reduced both the health and maximum health by the same amount.
Raw health damage will definitely add up over time during battles on an expedition and may become the deciding factor for whether you abandon an expedition or risk losing your character or an NPC.