Death occurs when a player, or creature reaches 0 hitpoints. Once a player has died, players respawn at Lumbridge Castle, while keeping their 3 most valuable items decided by their shop price. In the Wilderness if a player attacks an other they will get a Skull above their characters, and dying will make them loose ALL their items, unless they were using the Protect Items prayer spell, which lets them keep one additional item on death. This also works without a skull, giving the players the ability to die and keep 4 of their most valuable items.
When dying, players can also respawn at Falador Castle after the completition of the Recruitment Drivequest by talking to Sir Tiffy and have activated The Gaze of Saradomin. Activating it will make you respawn at the very center of Faldor's North-Western entrance, at the plaza in front of the Castle.