NPCs (Non Player Characters) are AI that you can interact with in a variety of ways, such as trading, fighting, or simply chatting, which will result in NPC Sayings. These include:
Above most NPCs' health bars will be the name of the creature, and the color of its' name depicts its' level in relation to yours. You will find names in order from easiest to fight to hardest to fight, like so:
All NPCs fall into one of three categories: Hostile, Neutral, or Friendly.
Hostile NPCs are designated by a red health bar. These NPCs will attack you on sight.
Neutral NPCs are designated by a green health bar, and will not attack you on sight. However, you can still attack them, which will initiate a fight with that NPC.
Friendly NPCs are usually within the bounds of a City. However, you may find adventurers wandering throughout the world by themselves or in groups. You cannot attack them, and they cannot attack you. These NPCs are designated by a blue health bar. Currently (as of 6 July 2013), only NPCs with blue health bars can be talked to. You can talk to shopkeepers, citizens of cities and adventurers by pressing R.