In Tibia, you die when your HP runs out. Not everything is lost though. The Gods will grant you another chance for a small sacrifice and you can be revived in your hometown's temple.
See also: Death Damage and Death List
Consequences of Death
Skill Loss
A character up to level 24 will lose 10% of their experience and skills in a death. After level 24, the percentage they will lose in a death will slowly decrease.
A level 50 without Blessings and Promotion will lose 1 level upon a death. For every 50 levels after a character will lose an adittional half of a level (without Blessings and Promotion).
If a level 100 dies without Blessings and Promotion, they will lose 1.5 levels. This is about 4.5% of their total experience (was 10% before the Spring update 2009. Likewise they will also lose 4.5% for their skills (Including magic level).
A level 150 will lose 2 levels, 200 will lose 2.5 levels etc.
Item Loss
Any container, like bags and backpacks and all its contents will be dropped every time during a death without Blessings/Aol.
Each piece of equipment has a 10% chance of dropping during death. (Can be reduced. See blessings)
Amulet of Loss
The Amulet of Loss is still in game however, all 5 blessings now give full item protection. It is still worth keeping after a death especially on a pvp world, until you get all the blessings back again. If you have all 5 Blessings and wear an Aol you will lose both your blessings and your Aol.
If you have a Red Skull, everything you wear will be lost upon a death - even if you have an Aol and/or all Blessings.