The interface makes use of both the mouse and the keyboard. You use the former to look around, aim weapons, examine objects and pick them up. The fully re-mappable keyboard controls movement, crouching, leaning, jumping, etc. and also provides access to screens for inventory, health, mission objectives et al. For rapid switching between frequently used items, there are 10 quick item slots mapped to the number keys. Inventory uses a square grid system.
Most items occupy one square, but larger ones occupy more.
Some items are stackable. Important conversations are initiated automatically when you get close enough to the other character. While some people have commented that they find this transition somewhat jarring, it didn't bother me. Conversation options are offered menu-style. In at least one case, your choice has an immediate impact on how you can proceed from that point on.