When your character's health points reach zero, it will die. Your corpse will remain and you will take control of a ghost instead. As a ghost, you will not be able to communicate with other players (unless they have learned the Spirit Speak skill).
Other players (with their Healing skill above 80, or with a Resurrect spell) can resurrect your ghost and your body will return to where your ghost was standing. Your corpse, however, will remain where you died.
You can also use resurrection shrines or Wandering Healers to resurrect your character.
When you die, your corpse will remain at it's location for 30 minutes, unless it becomes empty at some point then it will decay within a couple of minutes after becoming empty. The corpse will also turn into a skeleton halfway thru the decay cycle, or when the owner of the corpse resurrects within the same server-region, whichever comes first.