Inventory and merchant

The character window

I key (or the bag button on screen): the equipment worn around the character, the bag and the money. C key: the Statistics tab.
An empty equipment slot shows the greyed outline of what it expects.
The attribute summary shows what the equipment adds and what is lost above the cap.

40 slots. Money takes no room.
Equip: drag the item onto its slot, or double-click it (long press on a touch screen). The game checks that your class and level allow it.
Red cross: your class can never wear this item. Orange "lvl 12" band: you can wear it at that level.
Dropping an item asks for confirmation: it is final.
Multiple selection: Ctrl or Shift + click on several items (on a touch screen: long press, then a tap to add or remove one).

A monster's loot falls into a bag on the ground, where it died. The bag is reserved for the player who dealt the most damage to the monster: the others don't see it.
You pick it up with a click, or simply by walking over it.
If your bag is full, the money is taken anyway and the item stays on the ground (the game warns you).
A loot bag still on the ground when you leave the world disappears. Pick up before leaving.
What loot holds (money, item chances, rarities) is detailed in Items.

He is in each realm's starting town. Talk to him with a click, or with the E key when you are next to him.

You sell him your loot; he sells nothing: equipment comes from monsters. Money is used for messengers, trades, founding a guild, and later for crafting.
Price: the item's level × the rarity's coefficient (table in Items).
With the merchant's window open: double-click or right-click an item in the bag to sell it. "Sell all poor items" and "Sell what my class can't wear" buttons (items that only wait for a level are left alone). You can also sell a selection.
Selling a rare, epic or legendary item asks for confirmation.
A worn item can't be sold: take it off first.
Buyback: the last 10 items sold can be bought back at their selling price, until you leave the world.
Starting weapon: it is worth nothing when sold, but the merchant gives you one again for free if you no longer have it.

With a player of your realm, items and money: see Trading between players.