In Battery Mode, Health is a measure of what state the body of the player is in.
Unlike most other games, Battery Mode does not have an 'Health Point' system wherein a player can take a certain amount of set damage before they die. Rather, Battery Mode models damage based off different 'sectors' of the body. Each 'sector' will affect the body in different ways when it is struck. For example, being hit by a bullet in the foot will not affect the body significantly, except for causing a limp. However, being struck in a vital organ is a different matter. In this way, Battery Mode requires players to usually be struck somewhere in the upper body in order for them to be killed quickly; otherwise, it is possible for them to heal their wounds or to bleed to death.
Because of this, Health is not measured in exact terms. Rather, a player's body can be said to be 'Healthy', 'Injured' or 'Dead' and variants of these. What state a body's player is in affects almost every aspect of play - for example, if one's hand is severely crippled, they might be completely unable to fire their weapon. If a player's morale is high, they may be able to shrug off some of the effects that an injured body sustains - slower movement speed, etc. However, if a player's morale is low, even if they are healthy, they may feel the effects of an injured body.
A player's body state can be restored. However, this is only a useful feature if the player sustained minor injuries.
If the player sustains major injuries, they are automatically put back into the Reserves, even if their character does not actually die. If your character does not die and is instead recovered from the battlefield, then you are able to access that player again later after a convalescence period.
If a player sustains enough damage to be killed, then they are immediately put into the Reserves System. After that point, that player's character is unable to be recovered as they have died. All skills that the player had with that character are lost, and any good relationships they had with others are also lost.
In this way, players are vehemently encouraged not to throw away characters because of the difficulty of starting fresh. The player has an infinite number of characters to use, though.