Loot

Loot refers to the items that are found on corpses or in locked chests, or the act of stealing/taking items from corpses.

Using a dagger on a corpse allows you to cut off their head as a trophy (if it happens to be a monster/player), as well as giving you extra items such as hides and other resources.
- You can cut a corpse even if you do not have looting rights to it.
- Corpses decay after a set time, leaving their content on the ground for anyone to take (items too will decay with time).

Looting Rights

The following give you looting rights to a corpse:

Do damage to the monster/player
Be in a party allows you to loot your party-members' corpses (saving their items from monsters).
Double-click the corpse of a player and ask permission to loot it (the player can allow or decline).

Most monsters and hostile NPCs can loot the player's corpse, "yoinking" their stuff away.
Those monsters need to be killed in order to get the items it stole back, which can be very difficult if it happens to be a high level monster.

So if you cannot hope to defeat the monster on your own or with friends, you have to consider your items lost for good.

Whoever kills that monster will be able to get those items back, and some happen to be nice enough to report the find in the Lost & Found