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Damage is used to illustrate the concepts of wear-and-tear on items.
Items can accumulate damage through decay, usage, improvement failures or players and creatures destroying the item.
If an item reaches 100 damage it is destroyed. Damage on some items can be fixed by repairing or mending them. However damage on some items like food can not be fixed at all. Damage on them is permanent.
Decay is the process of accumulating damage over time. The decay rate depends on the item type and where the item is stored. Logs, rock shards or dirt for example will completely decay within days while other items may even last months and years. Items made from cedar trees decay slower. However containers made from cedar do NOT protect their content better.
Items on deed, in buildings or in containers will decay slower. Those effects do not add up however.
Items in inventory will generally decay slower or will not decay at all. An exception to this rule is food. Meals for example decay faster in inventory than anywhere else. For long travels or working on a site it's advised to store them in the cart or boat.
Usage damage is often referred to as just damage. Everytime an item is used in an action it may get damaged a bit. Items made out of oaken wood or steel receive 20% less usage damage(stacks multiplicatively with the reduction from rarity).
Many immobile items like walls, fences, forges, ovens, looms, beds, coffins, huge tubs, large barrels, large chests, bulk storage bins and food storage bins can be destroyed by players. You need 21 body strength and a heavy tool like large maul for it.
Should your character sustain damage, you will suffer one or more wounds of various severity. You can heal them by casting healing spells (see religion) or by using cotton as first aid. Healing covers will speed up the healing process, and are required for more severe wounds to stop bleeding, or getting worse.