Fatigue is a measure of exhaustion. It's built up through actions that cause Encumbrance, such as attacks and spellcasting, but certain attacks or magical abilities can add Fatigue in large amounts. Most non-Divine spells also add large sums of Fatigue to the caster. Unlike damage to Hit Points, it is not innately lethal.
to cast the spell, the cost is 407 Fatigue; starting with zero Fatigue, he ends up with 200 Fatigue and takes 4 damage [(400 - 200) / 50] from the recoil, with a 14% chance (7 * 2%) to take 5 damage instead. If he uses 5
instead, the cost is 207 Fatigue; he still ends up with 200 Fatigue, with a 14% chance to take 1 damage, but there's no guaranteed damage.
1 point of Fatigue is removed from each unit every combat round. Unconscious units lose 5 points of Fatigue instead. Units with points of Reinvigoration lose that much more Fatigue each round.
Drain Damage saps energy from the target and removes Fatigue from the attacker/spellcaster, equal to twice the damage done. Note that most Drain Damage from weapons is "partial", limited to removing only 10 Fatigue at most.