I tend to think death is a big deal. And having already crossed significantly over the half-century mark, it seems like an even bigger deal -- though, perhaps oddly, it concerns me less...
I tend to think the same about games in which I play a character -- typically myself (somewhat idealized) in whatever environment, no matter how fanciful, and not some largely scripted character whether concocted by the game developers or by other overly dramatic players. However, most games, MMO or single-player, tend to treat death little different from the arcade games of the 1980s -- though without the limits to three, five, or some augmented number before being forced to start over from the beginning.
In that regard, a majority of RPG or MMORPG games play like -- and are played by a large proportion of the player base, especially if PvP is supported -- like the arcade game, Gauntlet, a "dungeon crawler" for one to four players who could rampage through hoards of skeletons, ghosts, whatever as a warrior, wizard, valkyrie, or elf -- think something like fighter, mage, tank, thief where "thief" means faster than the other characters and often used to "steal" food and treasure from the other players by getting to it first. Great fun, but still an arcade game. Meaning, the player in no way identifies with the character being driven around the screen -- i.e. not "role-playing," scripted or otherwise.
However, games like those in the Elder Scrolls or Fallout series provide the opportunity to play yourself or some kind of alter-ego in a parallel universe with different history and, often, very different physics. (Well, for the most part. Bethesda Softworks still over-scripts the player character for my taste. It really isn't necessary to push the player into a main quest line -- or worse, saddle them with a fictional family as another means of driving player motivation. Various "alternate start" mods have been popular for good reasons.) But if I "live," in some sense, in an alternate reality, then my death should also make some kind of sense.
Years ago, playing Shadowbane -- a very good PvP MMO game in its day -- death led to graves other players could rob while players were whipped back to a respawn point to be reconstituted. Since that game had very little lore, quests, or any other RPG elements, it was possible to think of the world as some kind of hell in which player characters were doomed to fight and die for eternity -- an "eternity" which ended when the last free-to-play severs shut down. Now, Shadowbane's world was not nearly as "rich" as the world provided in The Elder Scrolls Online, but it did provide a great environment for PvP, including the construction and siege of castles -- trebuchets for the win!
However, The Elder Scrolls Online does not drop the player into hell -- not an intentional hell in any case. There is a rich world with one of the most developed histories and lore of any alternate reality ever conceived thanks to the larger Elder Scrolls franchise of which it is a part. As such, death should be "explained" by something which "fits" and is more "sophisticated," in some sense, than the Gauntlet arcade game.
Beginning as a soul-shriven "vestige" seems like a promising start. After all, having already "died" once before, death certainly is not permanent. (Eve Online does something similar with its clones -- which I considered heirs I could play when the current patriarch died rather than an endless respawning of the "same" character over and over. Still, the first death could be "troubling" until reading the Eve Online lore which explains that every capsuleer begins their career by "jumping" into their first space-based clone. Well, if you die to begin your new life, what's another death. Though, no matter what every clone activated with the memories and property of the preceding generation may feel, his or her predecessor could very easily be expected to develop a new sense of mortality as death came crashing into their final moments.) However, the vestige dies...and then just pops up at a wayshrine...fully clothed and carrying all the stuff he or she was hauling around at the moment of their demise. Hmm... Not really very satisfying. Being soul-shriven and, at least, once dead already...I just...teleported?
Granted, there really isn't a significant game mechanic that needs to be "fixed." I also get that many players -- and probably most of the self-identified "hard-core" PvPers -- would be enraged if they lost the stuff they were carrying when they die and no ally is available to either raise them from the dead or recover their stuff to return it. Still, that seems like a minimal "death penalty" that should be imposed while a better story for why the soul-shriven are reconstituted at a respawn point would be appreciated. Now, at veteran ranks, equipment may be far more "dear" and painful to lose -- assuming no ally or your own ability to return to recover your own dropped loot. But so far, before rising to such exalted levels, none of the equipment acquired seems so irreplaceable that it cannot, in fact, be replaced.
Yeah, too long...a daunting wall of words...probably signifying nothing...
The short version, it would be nice if the soul-shriven vestige had a better explanation for why he or she are doomed to a never-ending cycle of death and rebirth. That, and they really should not be able to take their stuff with them -- and consider the benefit that would convey to the PvP participants who should see looting those they kill as just compensation for losing their own stuff to others when bested on the field of battle.