In Dark Souls, Humanity lets a Hollowed player reverse Hollowing at a bonfire.
Humanity is a consumable resource represented by a small black sprite-like figure in the inventory. Players can use it while resting at a bonfire to regain human form, provided they have enough Humanity in their counter. Becoming human is important because it enables online summoning and invasion systems and allows certain NPC-related events to occur.
Humanity also has other functions. At a bonfire, a human player can spend it to kindle the fire, increasing the number of Estus Flask charges available there. The amount gained from using the item is separate from the Humanity counter displayed beside the player's health and stamina bars.
A common mix-up is confusing Humanity with the Human Effigy from Dark Souls II or Ember from Dark Souls III. Those are later-series items with similar purposes, but the original Dark Souls uses Humanity for both its item and resource systems.