Sheathe your weapons. Out of a fight your character now carries their gear: swords, axes and maces hang at the hip, daggers and wands at the right hip, greatswords, hammers, staves, spears, bows and shields ride on your back (on the outside of your backpack), and you walk with relaxed arms. Press Z to draw or sheathe; a short animation reaches for the hilt and you can keep walking while it plays.
No need to draw first. Attacking, casting, parrying or raising your guard draws instantly, so your first swing is never slower. After about 9 seconds out of combat your weapon goes back on its own. A weapon you drew with Z stays out until you put it away.
Gathering and crafting put your weapon away while the tool is in your hand, and talking to someone, opening a shop or the bank, entering a town or respawning sheathes too.
Other players see whether your weapons are drawn or sheathed.
