Items you obtain as a rewards for completing the quests, items you obtain from hunting and items you purchase from merchants will automatically be placed in your bag.
Bags can be opened by clicking on the icon placed on bottom right of the screen or by simply pressing I button on the keyboard.

Items can be divided into different categories of consumable items which includes wearing items, potions, arrows and scrolls, and also the Quest items that are used in the Quests. Wearing items can be divided into two categories of Weapons and Armors equipped on your character to upgrade your attack and defense powers as well as additional magical options.
Having a good Weapons and armors equipped can help you to achieve victory.

While your bag is open, open up a Character Information window by pressing C on the keyboard or click on the character's face icon located bottom right of the screen.
This is where you can see the stats and appearance of your character as well as slots for items.
Here you can drag the items out of the bag into the Info window to equip the item and see what your character looks like with those items. Or you can also equip the items by double click(left button on mouse) on the item located in your bag.

Consumable items like potions can be registered in Quick slot by dragging it with left mouse button from the bag into the quick slot and they can be consumed using shortcut keys.