It allows you to use or equip items, or to sell them for meat.

The inventory is divided into several different screens, each with a fairly self-explanatory title: "Consumables" holds food, drink, and certain potions and items, "equipment" holds all your naked-body-covering devices and weapons, and "miscellaneous" holds everything else.

In an attempt to make it easier for you to find what you're looking for (so you don't have to wander around like that guy from U2), each pane has sub-categories to help you find specific types of item. If you don't have any of the items in a sub-category, that category won't appear until you do.