Items are found by Daniel during his exploration of the Brennenburg Castle. Each item serves a different purpose, but almost all of them will be used at some point. Items will either serve as puzzle solutions to make progress in the game, or simply as aides to survial.
Main article: Tinderbox
Tinderboxes are small, cylindrical containers used by Daniel to light candles, fireplaces, and torches found throughout the castle along the walls, ground, tables, and ceilings. The lit candles help conserve precious oil for the lamp. In real life, tinderboxes may be used more than once, as they are simply containers holding flint, firesteel and tinder. Tinderboxes can be used more often than the Lantern, as they are much more common to find than Oil bottles.
Main article: Lantern
The Lantern is arguably the most important item in the game. It serves to illuminate the surrounding area, restoring Daniel's sanity and preventing further loss. It runs on oil found in either jars or small metal barrels found throughout the game. The barrels each contain a variable amount of oil depending on how much the player has in the lantern, and how many oil bottles are in the player's inventory. The less oil the player has in reserve, the more they will recieve from a barrel. The player finds it in the Old Archives, near where Daniel's letter to himself is located. The lantern's default control is the F key.
The light from the lantern helps alert monsters to your presence. At no point in the game is it mandatory to use the lantern during gameplay, though it will help players keep their sanity in areas that lack candles or torches, as stated above.
Main article: Oil
Oil is used in order to keep Daniel's lantern lit. As the lantern will slowly burn up the oil, a supply of it is needed. They are found in little blue tinted glass bottles found throughout the game. Oil comes in two variations, small and large. One small bottle of oil will fill up a quarter of your lantern while a large bottle will fill it halfway. Large oil potions are not present anywhere in the main story (apart from what appears to be a small easter egg at the end of the Revenge Ending, where a large oil potion is found upon a fallen shelf), but as they were not deleted from the game, they can still be integrated in custom stories.
Main article: Laudanum
Laudanum comes in a small glass bottle with a green label. It is used to restore health about one level higher, and contains approximately 10% powdered opium.
Main article: Puzzle items
Many items are used only for one or two specific puzzles, and not throughout the whole game. This includes keys, machine parts, ingredients, and tools.
Thalers are small bags of coins. They can be used to open up locked chests containing valuable items. The bags can contain various amounts of Thalers, ranging from 10 to 50. The thalers were probably a rejected item concept, as they're not present in the main story. However, it was not deleted, and is still possible to integrate in custom maps.
Sanity potions come in a small glass bottle with a blue label. One bottle restores sanity by one level. The sanity potion was probably a rejected item concept, as it's not present in the main story. However, it was not deleted, and is still possible to integrate in custom maps.
The pickaxe was presumably going to be used as a weapon, much like its counterpart from the Penumbra series. Its model was never deleted, and through modding it is possible to replace the lantern model with the pickaxe.