There is no realtime regeneration in this game once your health goes down it will stay down until you use the World > Rest menu to rest.
Resting can be done in any location you do not need to be in an Inn or near a camp fire or bed as you need to be in other similar games.
After resting if no random event happened your health, mana and stamina should regenerate to full and if applicable your active combat pet will also have its stats regenerated to full.
When you rest there is a chance that you will not actually rest and some random event occurs that disrupts your sleep. Random events include:
Some of these dreams/events give you items or special effects such as the +33 experience bonus effect.
You can be bitten when resting at night if you are bitten by a Nightstalker your picture will change to a blue hooded figure as well as giving you temporary access to this cool picture this event allows you to join the Reapers allegiance at level 100 in the second realm. The feralkin bite will give you a fur covered picture but will not give you access to the Reaper allegiance at level 100.