Still your character can be defeated by:
- animal attacks
- heat / burning
- cold / freezing
- other players in PvP (if enabled)
In this case you will see the message "You have been defeated" in large letters on a red-colored screen; and after a loading interval your character will respawn - either at your touchstone of you have placed it somewhere in the world (preferably in your favourite shelter / "base"), or at the spot where you have first entered the current game-world.
While your quickbar and equipment will still be the same like before (and you cannot lose any ingame-money nor "levels" yet), your inventory will be empty except for the touchstone-icon. If you had anything else in your inventory, it will be gone.
But not to worry - an orange skull icon can now be seen on the compass, showing you the way to the last dying-spot of your character. That's where the Death Statue will be - an urn containing all the stuff that you had in your inventory at the time of your defeat.
If you get close enough you will also be able to see a beam of white light that shines from this urn way up into the sky and down into the ground to make it easier for you to find it, even through all underground layers.
If your character is defeated a second time, the beam of light and skull-symbol will lead you to the last dying spot; and only after looting the Death Statue there a new beam of light and skull will then automatically show you the way to the first dying spot and urn. This way you can retrieve one Death Statue after another.
Different from Loot Bags or Treasure Chests you can also keep the urn as some kind of trophy. It cannot be used to store items, but can be placed for decorative means. If PvP-mode is activated on the game-world it's possible to loot death statues of players you have defeated - or to lose your stuff to players who have defeated you, as they can loot your death statue.
Since R28 a small tutorial window will be displayed upon the first defeat of your player-character explaining the death statue and skull-symbol.
Death Statues can "drop" underground occasionally, especially after falling downwards, so you might need to dig for them.
On very rare occasions when being defeated in the Corruption layer close to the the deepest layer of the world (end of world - blocks) or when being defeated while trying to cross the horizontal borders of the world a Death Statue might become unretrievable. Most often the Death Statue will still be within reach though.