The way elements work is that you find them floating around the game as dots. You merely have to move over them to pick them up automatically. The basic element is level 1. When you find two level 1 elements, it merges and becomes a level 2 element(unless you specify not to). You then need two level 2 elements to make a level 3 element. Depending on the size of your elemental bag, you'll want to probably only collect one element to start. Later in the game you'll have access to larger bags, and maybe even some rare infinately sized bags. So basically you run around trying to find elements during your journeys, I could go on about the tools, and tactics, but suffice it to say its a cross between Pac-Man, and Asheron's Call 1 motes.

So why do you want elements? Many reasons.

First off, you can wear two rings, one on each hand, and they affect your fireballs you throw depending on which elements you put in them. Also some special moves and magic require elemental power rings to pull off. Your main reason to collect elements is for your power rings.

Secondly, you'll run across amulets in the game. Amulets when worn with elements in the proper positions give you elemental resistances. I don't have the numbers down, but if someone has a level 10 fire element in a power ring for their fireball, and you have a level 10 water element in your amulet, the extra damage will be negated. Amulets can have 1-16 holes in them. The most common amulets have 1 hole in an element, and you can only place that specific element in it, so at first you may be carrying 16 amulets, one for each element you want to defend against. Just maybe. As you find better and better treasure, you'll find amulets with more slots open. You may even find amulets with non damaged slots but no hole. You can use a tool to open a slot in that element's place, but you may cause damage to the slot, or even break the whole amulet. You'll also have tools that will allow you to pry out elements from amulets, but you may damage or break the amulet, tool, slot, or element in the process. Even when you have several holes open, each one has a depth. The starting depth is 10, and it goes up to 100 by increments of 10. It may take decades of play to get a 16 slot amulet with 100 level deep holes in it. Fortunately, you don't all that defensive power to play :)

Thirdly, equipment may have some slots for elements in it. Weapons generally gain damage modifiers from adding elements to them and other special things depending on the element.

Finally Slotted Armor for the most part acts like a backup amulet for that specific part of the body. Say you find a piece of armor with one slot, and you stick in a level 8 soul element into it. That piece of armor will then prevent something like 8% corruption damage to your character, and 4% Chaos and 4% Dark damage. I don't have the numbers set in stone yet though. I may allow 100% elemental resistance(2^100 motes).

I want defense to work very well, while offense has more damage and early game advantage. Its harder to equip your character for a defensive strategy than it is for an offensive strategy. People won't be carelessly swaping out their elemental motes because they can break in the process or ruin their equipment. Yes, people will be finding equipment with elements in them, and be able to use a chisel to dig the elements out of them, and use them for other things. Yes there will be a tool that allows you to transmute elements. There will be element X, which can be combined with any element of the same level to get a higher level element. In addition to the many above reasons to collect elements, there will be other uses for them in the game too. For example, they'll be great items to trade with other players with. They'll work like a basic unit of money in the game even though there will be gold to be found and used. Elemental defense will have a lot of purpose when fighting in certain realms where most the monsters attack is the same element over and over again.

Here's a final teaser on elemental defense: Lets say you have 10% Water in an amulet. You enter the fire elemental plane, and you fight the monsters in the start because you don't have enough defense for the ones in the middle, and then you gain level 25 Fire. You can then put the level 25 fire in different amulet, and then go invade the water elemental plane. You'll be able to strive deeper than your first time because you leveled up some, and you have the 25% fire resistance. So you can collect more water elements so you can go back and mop up in the fire realm. You can keep sweeping back and forth between the realms and build yourself up that way. You don't have to do that by any stretch of the imagination, but I'm sure some people would like to do it that way. I plan on spending a decade programming and developing this game, and the rest of my lifetime adding story to the game. The game is being designed to have a gameplay lifespan of a person's lifespan.