When it comes to the perma-death mechanic, the one thing I want to make most clear is that this has no bearing on the difficulty of the game, despite what some folks might expect. In most games with perma-death, that means that the game is very hard. How difficult or easy this game is depends more on how far you push out into the unknown, how many risks and such you take, etc.
Rather, the perma-death here is basically just taking away that convention of "oops, you messed up, time for a do-over!" There are no do-overs in this game, except in the sense that there is in real life. In real life if you lose your job, it's not like you can never get another job -- you can. And you might even be able to get your old job back, under certain circumstances. What you can't do in real life is say "oh, actually, I went back in time and now I never lost my job in the first place!" So in real life you have the ability to try to correct past mistakes in various ways, but you can't erase them from existence.
That's very true also in AVWW, in terms of the general design of the game. There is no way to save your game -- things just get persisted to disk as you play, and as you exit, etc. So that's important because you can't just reload your last save if something happens that you don't like. As with Minecraft, you can back up ALL your world files if you want to be able to save-scum, but it's really a lot of files and not something we make at all convenient. That's counter to the idea of the game.
What Does Death Really Mean Here?
Going along with the above, death is the biggest mistake of all, of course. You did something that wind up getting "you" killed, and now "you" are dead. End of story for that character. But you-the-player of course continue on, and so does the world around your character.
You aren't even particular punished for losing that character: their inventory is right where they died, so you can go get it if you want. No rush, even. It will sit there without disappearing for as long as the game world goes on. In general, loot drops and other dropped items in this world never disappear unless someone picks them up. Because of the fragmentary way we save the world, this is easily possible while still keeping memory requirements quite low.
That's what I mean by persistence: even that little scrap of wood that came out of a tree that you can use for crafting will sit there in the world forever, until somebody does something with it. No fading-out of drops after a few seconds here.
Anyway, back to the death thing. So you do lose your inventory, but it's really not lost, because you hopefully know where you died. In terms of experience points you've gained, and the level of your character, however, none of that is lost. All experience and levels are actually larger than your character, anyway -- in multiplayer, all players share experience and levels between them, it's a global thing not a per-character thing. All the neutral-or-allied-to-you NPCs also share all this (monsters, obviously, do not).
So when you die, you choose a new character, and that's that. They come back with some basic equipment appropriate to their level, as well as the same level as the character that died. If your character was using some good equipment, you can go get it at your leisure. If you have a stash of equally-good equipment closer by, you can just take that instead. Equipment gets obsolete before too long anyway (since it has levels as well), so you're always building newer and better spells, weapons, traps, etc. Losing some equipment in the middle of some bad guy's lair isn't a crisis by any stretch, if that's what happened to you.
This Is A Really Forgiving Game, But Death Is Everywhere
There is no way to lose in this game. As in, there is no way that "the world ends and you can't play anymore." You can lose -- and boy, will you -- when it comes to smaller and larger objectives you might find. Attacking some bad guy's keep might lead to a real pile of graves in your graveyard, and a real depopulation of your NPCs as you take each one over, try to kill the bad guy, and die (probably you should get yourself stronger before going after that specific bad guy, apparently).
Most players will die as much as they level up, if not more. It's a really tragic sort of scenario here, for a lot of the characters. But it really depends completely on how you play, which brings us to...
The Difficulty Is Self-Tuning
The world of this game is normally a really dangerous place, but if you stick close to home, and stick to regions that are at or lower than your level, it's actually not that dangerous. But the rewards are smaller there, and what's the fun in that! Most players that are looking for challenge will go out... looking for challenge. And they will find it!
But for those players that are cautious, or less skilled, or just want to have a more relaxed time, you can do that, too. You can just hang out in Kokiri Village the whole time in Zelda if you want, and you hardly get attacked. But that gets boring pretty quick, because there is not much to do there.
In AVWW, you can opt to level up without engaging in combat (based on exploring instead), and you can just stick to the relatively safe areas, which have all sorts of interesting nooks and crannies, if you like. And as you level up, more of the world becomes "relatively safe" for you. So to extend that Zelda example, it's like if you had a very large Kokiri Village that had some low-level monsters, and which got bigger the more you explored around. You could play the whole game that way if you want, and it's a slower, more peaceful, less stressful way to play. It's perfectly valid!
Then again, I think most hardcore players are just absolutely happy when they get out of Kokiri Village the first time. I know I was itching to get out. If "Kokiri Village" is large and ever-expanding in this game, that's absolutely dwarfed by the dangerous parts of the world. And that's where all the really interesting rewards are, too.
Most players will, I think, strike some sort of balance between the safer regions and the more dangerous ones. The specific balance will depend on the player and their preferences -- even how they are feeling on a particular day. Sometimes I'm spoiling for a fight, other times I just want to explore around and find some useful smaller goodies, as well as do a bit of crafting or something. You don't have to play the same way each time you sit down to the game.
The World Lives On
I've mentioned before that the goal here is that you can only play with one world for as long as you're in the game, if that's what you want to do. Some players want to have multiple worlds, and that's perfectly fine and supported.
But there should never be a point where the world says "okay, that's it, you're done and you need to start a new world now." There also should never be a point where the player says "okay, I want to play with feature X, but I need to start a new world to do that." You can do anything in one world that you can do in another, no matter what the history of the respective worlds is.
The cool thing about having a world that is long-lived is that you build up a history there. Not some random facts about the backstory of that world; that's not that interesting. Instead, you build up a history of what you did in that world since you got there. Players of AI War know pretty much what I'm talking about. Know how some planets there take on a significance to you alone, because of one (or more) epic battles that were fought there?
In AI War, of course, all of that is in the player's mind. The game doesn't really keep track of the history of each planet, because that's really just not the focus of that game as a military strategy title. With AVWW, however, it's all about the world and the characters in it, and what those characters do.
If you have some character who was really accomplishing a lot and then died, the other characters will react to that. We're thinking about adding funerals into the game, for several good reasons I won't go into here (you don't have to attend with your new character if you don't want to).
Similarly, if you've been going around murdering lots of good NPCs with your character, and that character is really hated, then there might be a celebration that the evil guy -- you -- is dead, rather than a funeral. And your new character has their own past, and isn't really associated with those evil actions you took while in control of your prior character. The slate is wiped clean.
In that sense, you really are sort of like a puppet master. You're one character at a time only, and the only way to change characters is for your current character to die. But while you are "in character" for one individual, you can do whatever you like. Do bad deeds, do good ones, and the game will remember. The narrative of the world gets built up through what happens in this sort of fashion.
Many Of These Features Are For Beta
Just one note of warning: a lot of the features having to do with the hopes of NPCs, the deeds of player characters, and basically the narrative of the world in general, are all what we're targeting for beta. In early alpha, our focus is completely on the exploration and combat and crafting and all that sort of thing, which is a large enough topic by itself.
Perma-death is already there, and works as described except that there is no memory of what that character did (and no graves quite yet). But this game is being built in layers, and the first layer is the physicality of the world and how you interact with it. The second layer is the narratives that get told in that world.
Just so there's no confusion when it comes time for alpha!