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.
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.