Health

Depending on your character level and your gear you have a certain number of health points (or hitpoints). When your character takes damage, he loses health points. When these health points reach zero, you die. Also your health can be increased by 5 at the Loot Shrine.

Healing
Your character heals when he drinks a health potion or if he steps on a checkpoint that has not been depleted. Some gear also heals your character over time. But the effect of healing gear is usually not very huge. Nevertheless, it can be helpful if you are out of health potions and you are okay with waiting for a while until your health regenerates.

Damage over time effects
Some effects like burning and poison deal damage over time to a character.