Every creature has a class, for example:
If your level is not between the class level range, you can't attack the creature. When attacking a creature, the level of that creature will be equal to you. For example, if you are level 26 and you fight with a creature of class 2, that creature will be level 26 too.
Creatures behave in combat as naturally as possible, which means casting spells on you and on themselves, attack, defend, use potions and items. Currently the creatures only use a ranged skill, but soon they will do the things mentioned too.
At the end of the battle you get the items that the creatures carried (equipped or in backpack) and also have a small chance (20%) to discover that the creatures were guarding a small treasure chest. Creatures will carry realistic loot, like for instance a goblin will carry a leather armor and a short sword and maybe a shiny gem, while a vicious animal won't carry anything. Only when using your skinning skill you might get some animal leather or some tusks.
Creatures are of 3 types (normal, strong and champions) and each has stronger stats and better loot.