Every weapons and armors have their own durability and it decreases every time the Item is used. As the durability of certain items reaches between 50~30%, item will appear on the screen as yellow(see above). If it reaches below 30%, the image will appear in red and once the durability reaches 0, the image will appear as cracked.
Items will not function when the durability reaches 0 and need to be repaired.

Items can be repaired through the Repair Engineer NPC located in each village.
Left double click will apply general repair and you can choose an item to be repaired.

Right click on the NPC will show the menu and you can choose between, General Repair, Equipment Repair and Repair All. Equipment Repair will only repair the items that are equipped and Repair All will repair all the items equipped and the one in your bag.

All the repairs will cost you a certain amount of money depending on the condition of items, and once the repair is done, item durability UI will disappear.