The Inventory is where all items are placed. The number of items that a character may carry is based on their weight and how much the character can hold. In most cases, the more items you have, the more weight you have (arrows, some quest-related items, and keys do not have any weight). The inventory is divided into 10 categories; "Favorites," "Weapons," "Apparel," "Potions," "Scrolls," "Food," "Ingredients," "Books," "Keys," and "Miscellaneous."
The "Inventory" tab could be thought of as a combination of all tabs. The "Weapons" tab lists all weapons you are carrying, similar to the "Apparel" tab. The "Ingredients" tab lists, of course, all ingredients that can be used at the alchemists table to create potions, and the food tab is self-explanatory. . The Miscellaneous tab lists all quest-related items as well as other items that wouldn't generally be used in a normal manner.