When you take damage and fall down (With yellow stars spinning round you), you are not dead, you have just been knocked out. You will lose a point in two random proficiencies, drop everything not carried in your hands and will respawn back at whatever is your homestead. (Claim, leanto) This is NOT death, only another character can kill you, with the murder skill once you are knocked out. Death is permanent and your character ceases to exist forever. (You can however "Inherit your previous characters property). Animals so far cannot kill you and as far as I know, nothing but another character with Murder can.
I make this thread because I'm running across a lot of new players (And some who were even in Alpha.) lol, who don't realize that getting knocked out isn't death.
Edit: I even had one of my townies quit because a bear knocked him out. Apparently he didn't realize the difference.