Oblivion:Health

Health is the amount of damage that any person or creature can take before dying.  Health is also used for armor and weapons, in which case it provides the amount of damage the equipment can take before becoming completely broken.

Player Character
For your character, the amount of health you have depends on your character's level and endurance. When you level, you gain health points equal to a tenth of your endurance, rounded down. For example, if you have 80 health points and 98 endurance points at the time you level, your health will increase by 9 for a total 89 health points.  Examples of the relationship between endurance and health are provided in the section on Health Gains.

Your health can be increased using Fortify Health or Fortify Endurance effects.  Enchantments are particularly useful, since they have a constant effect.  With spells and potions, care is needed when relying on Fortify effects in the middle of combat.  When the effect expires, you will suddenly lose all your bonus health.  However, you will never die solely because a fortify effect expires: when Fortify Health expires you are left with at least 1 point of health; when Fortify Endurance expires you can be left with negative health but you will not die (at least not until you take 1 more point of damage).

You lose health when receiving damage. The red bar in the lower left corner of the screen shows you the current status of your health.  There are many possible ways to restore health.
Restore health potions, scrolls, and spells are all available.
Absorb Health spells and enchantments can be used to heal yourself at the expense of your enemy.
Resting will restore health; fast traveling over longer distances will also restore health.
Wayshrines and altars in Nine Divines chapels provide several healing effects simultaneously (but not to characters with too much Infamy).
The Shrine of Sithis, made available after purchasing the Vile Lair official plug-in provides comprehensive healing for characters with high Infamy.

See also Options for Healing for a discussion of ways to heal other types of damage your character may encounter.

Effects that damage your endurance also damage your health. This is because the base of your health is Endurance x 2. Raising your endurance will not affect previous level up health gains, however it will change the base number retroactively. For example, if your health is 100 and your endurance is 50 and you are hit with an effect that reduces your endurance to 40, you will lose 20 points of health ((50 - 40 = 10 endurance) * 2 = 20). Conversely, under the same circumstances if you drink a potion that raises your Endurance to 60, you will GAIN 20 points of health ((60 - 50) = 10 endurance) * 2 = 20). You have a similar, but permanent, raise if you increase your Endurance during level up.

Enemies
Several different methods are used to determine the health of the enemies you encounter.  Many creatures and many named NPCs have a fixed health, that does not depend upon your character's level.  Other creatures and NPCs are leveled, which means that their health depends upon the character's level.  For creatures, the formulae are provided on the appropriate creature page.  For NPCs, the formula used to determine their health is provided at NPCs.  

As soon as an enemy takes damage, a health indicator (a white semi-circle above the cursor) will appear on the screen.  The semi-circle shows what fraction of the enemy's health is remaining.
Most creatures and NPCs heal slowly.  Some NPCs may randomly be carrying restore health potions which they might use on themselves.  Also, some NPCs are able to cast restore health spells.
A few creatures have health regeneration capabilities, which allow them to heal quite rapidly.  Trolls and Dread Zombies in particular will continuously recover health during the course of a fight.
Endurance does not control creature and NPC health in the same way as it does the character's health.  Damage Endurance, Drain Endurance, or Fortify Endurance effects will not affect a creature or NPC's health; they will only affect their Fatigue.

Equipment
Each time a piece of armor is hit during combat, it takes damage, reducing its health.  Each time a weapon is used, its health is decreased.  In either case, the item becomes slightly less effective (armor provides less armor rating; weapons do less damage).  The item can continue to be used until its health reaches 0.  At that point, weapons will be unequipped, and armor will be ineffective but still equipped. 

Health of equipment is restored by repairing it.  If you have repair hammers in your inventory, you can repair the equipment yourself, using the Armorer skill.  Or else you can pay to have your equipment repaired, which is a service available in all cities.

In your inventory screen, the health value you see with your equipment does not represent a specific number of health points. It represents the health percentage compared to a fully-functional, unused piece. A Steel Shield which displays "100" on your inventory screen doesn't contain a mere 100 health points, it is currently at 100% of the health of a Steel Shield (which is 375 actual health points). A Fur Shield at 100 is also at full health, but only compared to other Fur Shields (which have 75 health points). A Steel Shield at 50% health will still have more real health points left in it than a Fur Shield has at 125%.

In this wiki, the information tables give you the actual number of health points within the items. The number displayed in the game on the Inventory screen is a percentage of how far removed your item is from its original, full health.