The death system is reminiscent in some ways of what would happen on death in EverQuest. You respawn at a predetermined location, and while you keep any equipment you were wearing, the rest of your inventory is on your soulless husk of a body. Retrieve it first and you get everything back. If someone else loots your body first, though, he or she gest a random assortment of items from your inventory and the rest are destroyed.
The blog entry also covers the issue of bounties, player-killing, and attempting to dissuade others from killing players in lawful regions. Players can set bounties on their killers, potentially refreshing the bounty each time said killer is successfully killed in retaliation, making a bounty hunter or group of same very rich indeed. Those interested in Pathfinder Online should check out all the details and keep watching as the game moves through development.