Your state of health, both physically and mentally, are your most important ongoing attributes. Your character's basic physical and mental well-being is always represented by two sets of figures (one for each state), and you will discover, especially in your formative years, that these will govern many of the things that you will and will not be able to achieve.
Your health is better described as your life force: if you find yourself subject to illness, attack, or simply over-exertion through swimming or running around, you will notice your health drops accordingly. Should this reach a significantly low point with respect to your maximum possible health (around 10%), your character lapses into unconsciousness leaving you immobile at wherever you may happen to be. Bleeding is a by-product of most forms of attack, in addition to straight loss of health or mana. It is likely to pose serious problems when your health is flagging, and should be attended to immediately. Gradually, bleeding from minor wounds stops of its own accord, as and when your body's natural defences deal with it.