'Hit Points (more commonly hp') are the pool of allowable damage that an in-game sprite holds. Once a sprite runs out of hit points, he dies, and must respawn in a safe area. It is considered that the more hp a character has, the stronger and more durable that character is.
e.g. a horned squig is fighting with a war lion. They both have roughly equal stats to each other. The war lion, however, has over twice as much hp as the horned squig. Slowly, the two combatants attack each other and whittle down their hp. The squig loses all his hp first as he has less of it to begin with, and is thus defeated. The war lion may then move on to his next battle.
It has not been confirmed whether or not a character will slowly regain their hp whilst out of battle, or whether they will have to regain it by other means (eating food, drinking a health potion, sleeping etc.)