Karma is an out-of-character representation of how much the gods like you. Each offering you make, whether it be a prayer or an item or even participation in a quest, can earn you karma points [KP].
When you reach a certain number of karma points, you can trade them in (through the Prize Shop) for special items or favours.
Gaining Karma
You can gain karma in many different ways. Some are easier than others but will not earn you much; others are dangerous but more rewarding.
Offerings
The easiest (and least dangerous) in-character method of earning karma is for your character to leave money or items at their chosen god's shrine.
Each god is different and will be more or less receptive to certain types of items but it's up to you to figure out which.
Monetary Offerings
The return on your money varies depending on the deity you're making the offering to, their current mood, and what they already think of you.
Gods don't value money all that much and will swiftly become bored of monetary offerings, so you may find the number of karma points you receive reducing with each offering.
Sentimental Offerings
If an item you offer holds sentimental value, you could earn up to double its monetary value in karma points.
Questing
Participating in official plots and quests is the most dangerous in-character method of earning karma. They usually involve other rewards as well, though, so they're definitely worth the effort.
Divine Service
Some gods look for individuals willing to serve them. This service can be as simple as maintaining a shrine or encouraging more people to worship them, or it might include dangerous or diplomatic missions. Often, they include 'payment' in karma (see Occupations?).
Spending Karma
For a list of what you can buy with your karma points, please visit the Prize Shop.