In a nutshell: Similar to D&D 4e healing surges, but also triggers automatically.
This variant gives each character a capacity to recover quickly from damage. This capacity, measured as reserve points, replenishes lost hit points quickly after a fight. Thus, characters may be wounded and near death by the end of a fight, but then recover to full strength (or nearly full strength) before the next fight begins.
Non-living constructs and non-intelligent undead cannot heal on their own (such as through rest), so neither of those kinds of creatures get reserve points. Living constructs (such as warforged) have reserve points but can only use them to recover nonlethal damage. Intelligent undead have reserve points but are immune to nonlethal damage, so their reserve points only recover lethal damage.
Using Reserve Points
A character’s quantity of reserve points is equal to his full normal hit point total.
After a character becomes injured (by losing hit points), reserve points begin automatically converting to hit points at the rate of 1 per minute of nonstrenuous activity (such as resting or hiking, but not climbing, swimming or fighting). Thus, for each minute of nonstrenuous activity, the character regains 1 hit point and loses 1 reserve point. However, if a character is at 0 hit points then their reserve points do not function in any way.
Nonlethal Damage and Strife
Reserve points can also reduce a character’s nonlethal damage and strife. For each reserve point that converts to a hit point, a character also subtracts 1 point from his nonlethal damage and subtracts 1 point from strife. In addition, a character can take a standard action (which does not provoke an attack of opportunity) to “spend” a number of reserve points equal to or less than his Hit Dice (HD) to reduce his nonlethal damage (and strife) an equal amount. (If a character has the Endurance feat, this is a move action, to reflect the fact that such characters can more easily persevere through exhausting situations.) You can take this action even while fleeing because of being frightened T, panicked T, or cowering T.
Replenishing Reserve Points
Characters naturally regain lost reserve points at the same rate that they naturally heal lost hit points. If a character receives any magical or psionic healing, that healing is applied first to the character’s lost hit points. Any excess healing left over after the character’s hit points are restored to full normal is applied to increase the character’s current reserve point total (up to its normal maximum).
If a character’s Constitution modifier goes up or down, his reserve points go up or down just as his hit points do. If a decrease in Constitution would drop a character’s reserve points below 0, any excess reduction is deducted from his current hit points.