Fatigue determines the efficiency of your actions. As fatigue goes down it begins to negatively affect certain actions in the game. For instance, melee damage is severly reduced when fatigue is at zero. Likewise, the ability to use stealth and pickpocketing may also be affected. Spellcasting ability, however, is not affected by your fatigue.
The maximum fatigue score is the sum of your current Endurance, Strength, Agility, and Willpower. Changes to any of these attributes has an equal change in your overall maximum fatigue score; attribute increases past 100 continue to increase your fatigue. You lose fatigue by performing actions that would typically tire you (jumping, attacking). It is restored over time, at a rate of 10 points per second (without any mods). Running will not lower your fatigue, but it will reduce the rate of fatigue restoration, unless you have master level Athletics.
Note that if your character suffers a spell or a hand-to-hand attack that lowers fatigue below 0, he or she will collapse on the ground until the Fatigue exceeds zero. NPCs and most Creatures can suffer the same effects. So if you have any enchanted weapons and/or spells that damage or drain fatigue, use them to your advantage! Will-o-the-wisps, ghosts, and wraiths are unaffected because they lack a falling animation.
See Damage Fatigue for more details.
- Melee damage (Damage Formula) is further modified by fatigue:
Damage * ( ( Fatigue / MaxFatigue ) + 1 ) / 2
- A summary of equations that govern Fatigue, including the amount lost by various actions and the rate at which it regenerates, is provided at TESCSWiki.