There were two ways in which players could lose their items. The first and the most despised as it would lead to the greatest loss. If someone actually took the time to rob your body and then revived you. In this case, the items would not turn into particles and never find their way back to you.
However, in this case, it was not possible to use the items either. At least not fully. Sure you could wear them and swing them (if a weapon), however, all that you would gain would be the base armor and damage stats. The item's abilities will be locked due to being bound to the original owner.
This was discovered when a few players tried to loot others, rival guilds in the empires where things were still very relaxed but starting to heat up.