Sleeping is how you fully heal yourself
As you take damage, you’ll only be able to heal yourself with items and spells up to a certain threshold of your health. The only way to refill your entire health bar is by resting at an inn in one of the towns or by making a camp at one of the designated campfire locations you’ll find in the world. You’ll need a camping kit to set one of these up. Any of these you get will do, but some are geared toward different environments and will give you different perks or advantages by using them in the appropriate area. But whatever you do, if you find your health lowered to an unusable level, head back to a safe place or set up camp.
