In Dark Souls, to be Undead means that the victim has died, but has been reanimated. Most Undead were sent to the Undead Asylum and imprisoned to await the end of the world. Undeath is seen as a curse or a disease by the living.
The curse of undeath was created when Gwyn, Lord of Cinder refused to relinquish the Age of Fire to make way for the Age of Dark. How undeath is transmitted is unknown, but it almost always occurs regardless of the victim's intentions. However, some individuals like Solaire of Astora willingly embraced undeath. All those that become Undead are burdened with the Darksign.
The second account is also partially proven true via the existence of the Ringed Knights' armor and weaponry, for it is branded with a Seal of Fire identical in nature to the Darksign. However, do note that the armor says Gods and not a singular God, meaning that the origin of the Darksign itself is still unknown but certainly within Lordran.
Unlike the living, the Undead do not perish with death; instead, they are resurrected at bonfires. However, in time they gradually lose their sanity and intelligence - called Hollowing - unless they can procure humanity. Humanity can be used at bonfires to reverse hollowing, but not undeath. An Undead that has fully lost their sanity is known as a Hollow.
Hollows are universally hostile to lucid individuals, including other Undead. Unlike other Undead, hollows die permanently when killed.
Another effect of undeath is the gradual decay of the body over time; this effect is reversed when hollowing is reversed, however do note that at a certain point hollowing itself becomes irreversible. It is also mentioned by Aldia that the "illusion of love" is said to cease when the Darksign touches a human's flesh.
As a general rule, the Undead are treated with hostility by the living. Game lore suggests that Undead are hunted down by followers of Allfather Lloyd in the lands of the living, who round them up and send them to an asylum with no hope of release. Many of the characters the player meets mention the stigma they faced from the rest of society before they left their former homes.
- Aldia, when met in the Undead Crypt: "Once, the Lord of Light banished Dark, and all that stemmed from humanity. And men assumed a fleeting form. These are the roots of our world. Men are props on the stage of life, and no matter how tender, how exquisite…A lie will remain a lie. Young Hollow, knowing this, do you still desire peace?"
- Ringed Knight Set description: "Malformed black armor of the Ringed Knights. The armor of early men was forged in the Abyss, and betrays a smidgen of life. For this reason the gods cast a seal of fire upon such armor, and those who possessed them."
- When met in the Dragon Shrine: "Peace grants men the illusion of life. Shackled by falsehoods, they yearn for love, unaware of its grand illusion. Until, the curse touches their flesh. We are bound by this yoke. As true as the Dark that churns within men."