One of the things that is always a challenge for me with Savage Worlds after stepping away from it for awhile is the damage model.
Characters can be:
2. One Wound
3. Two Wounds
4. Three Wounds
5. Worm food
1-4 of the above plus being 'Shaken'
What is Shaken?
Shaken is a catch-all state that can simulate having the wind knocked out of you, a terrible insult
about your ancestry hitting home or a moment of absolute terror.
Example: Gandalf is facing a Balrog. Balrogs are creatures of primordial terror, but with severe self confidence issues.
Gandalf yells "You Shall Not Pass!" at the Balrog and makes a successful Taunt roll as he understands the Balrog's deep seated psychological issues and intentionally avoids including a trigger warning when he shouts at it.
The Balrog, its self confidence thrown into a downward spiral of self doubt due to Gandalf's stating that the Balrgo was incapable of performing its basic function of passing through and killing all kinds of things is now Shaken.
What is Wounded?
Wounds represent material damage, and starts a 'death spiral' as every skill check you make now has a penalty equal to the number of wounds.
Example: Gandalf wins the initiative draw for the next round, and with deft maneuver, lands a called shot to the Balrog's lad-bits. Even with the called shot, the damage he rolls is only equal to the Balrog's Toughness which would normally Shake him, however since the Balrog is experiencing an existential crisis and is already Shaken, it becomes wounded.
What is Soaking?
Important characters, known as Wildcards (players, special enemies) can spend a 'Benny' to attempt to 'soak' damage by rolling their Vigor and removing one wound gained on that attack for every success and raise. (A success is a 4, a raise is every 4 after that.) Wound penalties from previous attacks impact the soak roll as well, so if Gandalf had hit the Balrog in the balls once before, and done damage, that would penalize the Balrog's attempt to shake off this damage.
IF you soak all of your damage, and have no wounds remaining , and if your 'Shaken' condition was caused by this attack, you can lose that for free as well.
Example: The GM spends a Benny to allow the Balrog to save his naughty bits and the Balrog rolls its Vigor of d12 plus a d6 because it is a Wildcard. It rolls a 1 on the d12, but an 8 on the d6 after it 'explodes', Soaking the wound entirely.
The Balrog now has 0 Wounds, but is still Shaken as that wasn't the result of Gandalf fighting dirty... (They didn't call him the Grey for nothin' folks...)
Recovering from Shaken:
On the Shaken character's turn, you make a Spirit roll, if you get a success (4) you are no longer shaken. If you are a Wildcard, or the GM wants to spend a Benny, you can also pay one of those to recover automatically.
Example: The Balrog rolls a d6 for its Spirit, and a d6 for being a Wildcard, and gets a 4 on the Spirit dice. The brief pain experienced was enough to snap its focus back to the annoying Wizard and readied its giant flaming whip to end the irksome thing.
"Balls..." muttered Gandalf.
Also you will have to forgive me if I was a little bit off on how the fight between Gandalf and the Balrog was presented in the fiction. It has been awhile since I read Tolkein, but I'm pretty sure this is what he was shooting for.