In order to add Equipment items to a Unit, or Usable items to a Village, the unit's Village needs to contain at least one Blacksmith, Shopkeeper or Quacksalver. These three cards allow a unlimited number of Items cards, respectively, but each one give a different bonus.
When you draw a Item card from the Deck or Discard Pile, the card goes to your hand like all other cards in game.
Usable cards can only be placed in a Village (like Animal and Building cards), and Equipable only in Units. Always you place a Item card you spent a number of gold as marked in the 'COST' field of the card ('you need to subtract Gold of your Total Score Card at the moment you place these cards).
In your turn, as a free action, you can discard as many Items cards from your hand as you like. It not count as your Action Phase. For each card you discard this way, add half of the total cost of these cards, rounded down, in your Total Score Card. The name of this act is 'selling' cards.
All Usable cards are discarted after the use, and not destroyed (you don't 'sell' the card this way). Only one equipable card can be placed as a equipment in your unit and if the unit is kidnapped the item go to the opponent and he don't pay any gold for this (the Equipment goes to his hand, so he can equip in any other unit). When a unit with a equipment is destroyed, the item go to the Discard Pile. If you want to return the Equipment in your unit to your hand, you must subtract half the Gold Cost of the Item to your Total Score Card.
If you hire a unit, after revealing it, you can add any Item card from your hand (only from hand). You don't need any of the three itens masters, until it's a hired unit. After compare power in battle, 'DESTROY the item with the equipped unit (as a punishment for a 'super hired' unit). You still need to pay the Item cost.
You can also give a Item card to a opponent at no Gold cost for him (at least if you have a Quacksalver in any of your Villages).