The backpack is an item that can be found in the overworld of the game. Known spawn locations include a wooden cabin next to the entrance for one of the castles and the Hermit's Hut.
The backpack can be carried in the inventory, taking up 3 by 4 slots of space, or it can be worn in the cloak slot. When the player interacts with the backpack, they are given the option to use it, which opens up a small secondary inventory of 3 by 4 slots. Since the internal inventory of the backpack is the same as the space it takes up, it offers no value unless carried in the cloak slot. For the same reason, one backpack can be put into another, but in this case the contents of the inner backpack cannot be accessed or altered unless it gets equipped or put into the character's main inventory.
Opening the backpack takes a turn, so it is not advisable to keep any items you may need to use in combat stored within it.