Items have a health. When a weapon is used to attack its health will decrease by one for each attack. When hit, all armour equipment worn will have their health decreased by one at a 40% chance for each successful attack made on the wearer. Weapons made from durability will lose 1 health per successful attack made on an enemy; weapons have an extremely high hp value so this should not deter you from using them. Actions which would normally break an item (such as meltdown) will make the item lose more durability instead of breaking.
When a durability based item is crafted by a blacksmith/whitesmith that is ranked (a ranker) it will have 10% more health than it normally would. This bonus is fixed at the time of creation, so items made before when a blacksmith/whitesmith was ranker will not have this bonus. Likewise, if the ranker falls off the board and is no longer a ranker the items made prior to that will still have their bonus.
When an equipment which is part of the durability system is refined it will have its current health increased by 1% per refine. This means it's best to refine durability based equipment to the desired level before using it.
Trading and Selling
You can trade and even vend durability based equipment. Only equipment which has not had any lost durability can be vended, though you can refine it first as long as you don't use it (unless it's bind on equip). Used items can be still be traded via the trade window. When doing this the current health will be displayed in a guild-chat-style message when the item is added to the window. This means you need to have guild chat display on to see it. It will say the current health and the max health of any durability based item added to the trade window.
When an item breaks
When an item breaks it cannot be repaired or fixed in any way. You cannot prevent an item from breaking. Once an item breaks it can be exchanged at an NPC. If it was carded, the cards will be returned. If the item was crafted then some materials used in the crafting process may be returned. If the item was a quest reward or drop no other items will be returned.