When you kill monsters and mobs, they will often drop things for you. The following is a guide to the types of drops you can receive:

Weapons & Armor Random armor and weapons for any class can drop from mobs that you kill. The level of the armor or weapon gets higher as you kill higher mob levels. You can equip them (if the item dropped was for your class), sell them to merchants or players, or smelt them.	Gold Gold is the most common drop as it is currency for the world of Iris
Potions There are many types of potions, but the only ones that drop from mobs are Small Healing and Small Mana Potions	Manuals Manuals are used for armor and weapon crafting. The level of a manual drop is based upon the level of mob you are fighting
Accessories Accessories can drop from any mob. The bonuses of the accessory do not seem to be linked to the level of the mob	Heaven Stones These are a very rare drop and are highly sought after. Heaven Stones are used for upgrading and have a higher success rate than Smelting Stones
Moon Stones Moon Stones are tokens that can be used to gamble at the Moon Statue in Randol Town	Pet Items There are two pet items in the game, both of which are acquired from drops: the pan flute for acquiring a horse and the drake egg for acquiring a dragon
Transformation Scrolls Transformation scrolls temporarily turn you into a type of monster. The type of monster depends on the scroll (jaguars drop jaguar scrolls, sasquatch drop sasquatch scrolls, etc.)	Quest Items Quest items are monster drops that you are required to collect for certain quests in order to obtain the quest reward

Production Items: Production items such as old pouches, raw food, forgotten tailsman, fox tails, etc. do not currently appear to have a use other than selling to a merchant for a few gold coins. However, there was a recent in-game scavenger hunt that required some of these items.