Player death occurs when the health meter reaches 0%. This may happen through damage by enemies, or by means of starvation.
Easy
In easy mode, the player re-spawns after death and keeps all items. Upon respawning you regain all health, hunger and energy.
Normal
In normal mode, all items, except for equipments, armour and ammo, are by the player. These items may despawn over time, so you might want to retrieve these items as soon as possible. Upon respawning you regain all health, hunger and energy.
Hardcore
In hardcore mode, the world is deleted upon death. You don't respawn, and instead lose all the work you put into the world, so it will be of your highest interest not to die.
History
0.9.3 - Added Difficulty