There are a variety of items in the game, and a great many items. Many are consumables, many can be attached or applied to characters, and others are used for crafting.
The first category you'll see in your inventory is Crafting Materials. These are solely used for crafting, and nothing else. To use them, you'll need to go into Krawft's Crafting, accessible any time from the Activities dropdown in the navbar. The following category is Special Crafting Materials, which are also only used in crafting, but are harder to get and usually only dropped during certain holidays or gained via enchanting, such as in the case of corrupted scrolls and tomes.
The third category is Unique Items. These consist of consumables and specialty items that can be attached to characters or submissions, generally. These items have many different effects, and consist of tomes, scrolls, Slime Expedition slime companions, charms, various vouchers, potions, cosmetics, and other consumables.
Consumables are items that disappear on use, and are attached to submissions through the inventory dropdown. They are used to increase the rewards from the submission, or to give your character(s) an advantage, such as during battles.
After that is Openables. There are many types of openables, such as ones that give you items and/or currency when opened, ones that create a geno slot when you use them, ones that give you raffle tickets and enter you in a current raffle when you use them, and then there's packs (like the Elemental, Universe, and Holiday packs). There are also gachas, which give you vouchers that must be submitted to Admin Requests to claim their rewards. Other vouchers gained, other than tiered Familiar Vouchers bought from Ares' Shop, must also be redeemed through Admin Requests. Generally, the description will say whether a voucher must be manually redeemed.
To open an Openable, you need to click the item in your public inventory, and check the checkbox next to the item in the popup. Then, click Open or Use, depending on the type of openable. It will then produce the contents in your inventory. If you get an error, usually that means you forgot to check the checkbox.
The next three categories are Traits, Markings, and Unique Traits. Traits include Common to Legendary physical trait applicators, such as ears, manes, wings, and many other body "parts." Markings include only Common to Legendary marking applicators. Unique Traits consists of both physical body traits and markings, which are of Unique rarity. All three of these categories can be applied to characters during the design process. When submitting for Design Approval or Design Update, be sure to attach any traits or markings you are applying to the character from the inventory dropdown, and be sure to mention in the comments as well.
The next three categories are Unenchanted Equipment, Enchanted Equipment, and Unique Equipment. Unenchanted equipment consists of all regular equipment that does not have any enchantments on it. They may or may not already have slots revealed, but slots themselves don't count as enchanting. Enchanted equipment is the same, but they do have enchants on them, such as boosts like Burning, Magical Energy, Farmer, and so on, or may have stat increases or decreases, like +5 Stamina or -4 Luck. Unique equipment is specialty equipment that is generally dropped from events, bosses, holidays, or packs. They often come with unique and special effects.
When attaching any equipment to a character, do not add it through the inventory dropdown. Please only list it in the comments in a detailed format, as outlined in the Familiars & Equipment Guide.
After that are three more categories: Familiars, Legendary Familiars, and Unique Familiars. The first category contains only Common to Rare familiars, which can be acquired through many aspects of gameplay. Legendary familiars can only be gained through boss battles, events, or rarely, Tatsu's Auction House (remember you will need coupons from Gaia's Giveaways to enter the Auction House shop). Generally, Legendary familiars will also have better effects. Lastly, Unique familiars are only obtained through packs, or specific boss battle events.
Familiars be attached either to characters, or to Dens. Please follow the instructions in the Familiars & Equipment Guide when attaching familiars.
The last two categories are Den Items and Special Den Items. Den items are solely used to attach to Dens, and consist of non-special den items, whereas Special Den Items are specialty items. You can get special den items during specific holidays or events.