Speak to Rest Guide Milene, at the Tower Base. She explains more about stamina and resting:
Your stamina deteriorates if you exert yourself without recharging. Your maximum HP and MP shrinks, and you suffer a penalty to critical hits. Getting fully recharged will get you back into fighting shape. To recharge, stand next to a campfire until your stamina fully recovers. Don't forget to use firewood to extend the life of your campfire, and charms to provide you with extra bonuses.
Click on the quest to start it:
Recharge It
Fighting is hard work, and even the deadliest combatant can be made weak through exhaustion. An exhausted comrade is a useless one! If you fight without periodically recharging at a campfire, your stamina worsens. And the worse your stamina, the lower your maximum HP and MP. You can check your stamina by hovering over the heart shaped icon near the top of the screen. Understood?
I just put a campfire in your bag. Right click to use it, then stand nearby to recharge. Stay at the fire until your Stamina reaches 120%, then talk to me again, and I'll explain more.
Accept the quest. Your goal is to set up a campfire and recharge it until your stamina reaches 120%. Open your inventory and right click on the campfire to deploy it. Stand near it and recharge. After you have recharged, Talk to Milene again, to learn more about campfires and stamina. She tells you that if you keep fighting without recharging at a campfire, your stamina worsens. And the worse your stamina, the lower your maximum HP and MP. You can check your stamina by putting your cursor over the heart shaped icon near the top of the screen. When the percentage gets low, it's time to recharge.
Your reward consists of experience, gold, and a charm. This completes the quest, Recharge It.