Once you've taken damage you'll start to get used to Pillars of Eternity health, and death, mechanics which is initially a little jarring and takes getting used to. Rather than just a health bar, characters have health and endurance. Endurance is a smaller pool of hit points that refills quickly out of combat, but if you're reduced to zero endurance you're knocked out. Most of the game's healing spells and potions refill endurance. Whenever you take endurance damage, however, you also take some health damage. Health represents a more permanent injury, and can only be recovered by resting or a few limited abilities. Depending on the difficulty and options, being reduced to zero health either kills or maims the character. A maimed character can still get up after the fight, but has severe penalties, and will die if damaged again. There is no raise dead, though - or at least that I've found - once a character is dead, they are gone.
This still means you need to make good choices in combat and not get in over your head when you're weak, but it avoids some of the awkward item juggling of older games when a characters goes down in a fight and you need to pick up all their crap, and then backtrack to town to revive them.
Also, can I just take a moment to express my affection for how Pillars of Eternity handles difficulty. Only on the very highest difficulty setting are the actual stats adjusted. Changing the difficulty otherwise only affects the type and number of opponents present at the location, rather than just turning everything into a bucket of hit points and making those all hit like trucks. There's also a plethora of options in order to customize the experience further. Elite Mode removed many of the helpful UI elements, like AOE indicators, and Trial of Iron is an ironman mode that limits you to one save and deletes it if you die.
There are even further additional tweaks to specific gameplay elements, including what's likely to be the most contentious - the Stash. The Stash is a shared inventory space that depending on your options will even be available in the field. It's where your quest items and crafting materials will get dropped, but if you play with the Stash enabled you can put items in from the field. It basically unbalances a lot of the experience. There's already been some hand waving of merchant's available coinage to buy items and items only being slot based instead of having a weight, it's much too easy to make tons of money by simply vacuuming up every rusted sword with the Stash. Granted, Pillars of Eternity does counteract this a bit by having many of the items drops, like monster bits and gems, be necessary for crafting.
Finally, on the technical side, I've run into almost no problems. I've hit one minor gameplay issue where a party member with an ability to second chance being knocked out will awkwardly stand up, and you'll still get the game over screen if he was the last one to go down, but otherwise everything has been smooth or they were something Obsidian is already aware of. The game runs well even with lots of spell effects occurring at once. Which you'll start to see gobs of them when they are multiple casters on both your team and the enemy and it's quite visually impressive. Graphically the character models are a nice improvement over traditional isometric RPGs, though the backgrounds don't quite stand up to some of the more picturesque older titles.
Bottom Line: It's the best new, isometric RPG to come out in years.
Recommendation: While Pillars of Eternity is certainly banking on a nostalgic fan base, it's still an excellent RPG in its own right. It's a game rich with player agency, giving you tons of control to craft your story or explore different solutions to the presented problems. You know, actual roleplaying not simply a game with a leveling and stat system stapled on.