When your Health Bar is completely depleted and you have zero Health Points or less, your Player Character will die. Falling outside of playable areas will instantly deplete the Health Bar completely. After dying, your Player Character will return to the game at the Spawn Shrine or Spawn Spot designated for the Area it died in.
When you die, you'll lose an amount of PeP equal to one PeP rank, meaning your PeP rank is lowered by 1 and you'll need to obtain more PeP to get to next rank.