Health Points (HP) represent the basic life form's life force. If it reaches 0, they die. All beings on Newerth are self-aware, and as such they know what their own HP is. Some even know that of their foes. By default, Newerthian humanoids tend to have 10 maximum HP. The Tainted work differently: they start at 10, but when they lose their left eye things change. The Tainted have 3 maximum HP, and it cannot be increased through the use of Life Capsules or other similar items. When they regain their left eye, their maximum HP increases significantly - it will then be 20 max HP and can be raised with Life Capsules and similar items.
If the player is not on 3-HP Mode, Serenity will say "I guess I'm the exception?", thus lampshading it.