As the enemy spell strikes your body, you fall, and everything goes dark. You can no longer feel the pain of your mortal injuries, but you still have consciousness. Although you cannot see or hear, you can still sense your connection with the fey dragon. Perhaps it is this connection that keeps your spirit from going wherever spirits go after death.
There is no sense of time or location, but you feel like you are moving - perhaps your spirit is moving with your companion? Are you in the Fey Realm now? Or is there another force at work?
Suddenly you see a great light, and are back in your body again. But wait - this isn't your broken body on the battlefield - everything feels tender and new. Instead of the battlefield, you find yourself in the queen's throne room, and, distressingly, not in possession of anything you were not born with!
Death in RPG-style videogames is handled many different ways, depending on the game. If there's not a reasonable chance of death in the game, then players may lose interest because the game is not challenging enough. If the penalty for death is too great, then it may be too discouraging to players, and they may give up on the game.
Here are a few possible approaches to handling in-game death:
This is the most hard-core option. If the character dies in the game, then it is game over, and you need to start from scratch with a new character. This style is common mainly for roguelike games such as NetHack, where challenges are randomly-generated every time you play the game.
Restore From Save
This is a bit like permadeath in that there is no way for the character to be brought back to life in the game, but the ability to restore from the last saved games gives the player another chance. Within the game narrative, it is as if the death never happened.
Resurrection With Penalties
This is probably the most common approach in RPG-style videogames. When the character dies, they have the option of being brought back to life, but it has a cost: it could be money, experience points, or loss of equipment.
Resurrection With No Penalty
Some games allow you to be brought back to life as often as you wish with no real penalty, other than perhaps inconvenience. The original Legend of Zelda is a good example of this.
Ultima Series Deaths
For Ultima fans, here's a page describing how character deaths are handled throughout the series.
Character Death in Penult
In Penult, the character and the queen both share a connection to the Fey Realm via their fey companions (Penult Manual). By means of this shared connection, she is able to bring the player's spirit back to her upon death, and create a new body for it to inhabit via her magic. Given this rationale, a resurrected character has no equipment or gold when brought back, and only their experience.
It has been said by those who have played it that it is too harsh of a penalty, and discouraging to lose everything after spending so much time earning gold for their equipment.
I'm brainstorming other ways to handle death and resurrection. I don't want it to be consequence-free, but I also don't want it to beel too discouraging.
My workaround in my latest demo is to have the queen give 100 G.P. per character level, which will at least allow them to partially replace their lost equipment upon death. I'm open to other ideas, but they have to fit logically with the rationale above about how the character is brought back to life by the queen.