First of all; Create your character, although clothing and equipment are very optional depending on the challenge you want, the skills and personality trait aren't, you need to choose wisely.
Personally I try to go with a mix of Fitness 2 stars, Hand to hand 2 stars and Archery/gun 2 stars and I would either put a star on medic or cooking. As for personality traits, some can be a blessing in some occasion and a curse in the other, play with them to try new gameplay. Side Note, in Story mode you don't start with as much skill points as in sand box, choose carefully. However, I'm not 100% sure but I do think the experience multiplier is higher than in sandbox

DAY 1
try to survive, scavenge as much as possible cities while finding better clothes, a backpack, better weapons and tools to make your camp. Don't carry everything you find as long as you know where you stash it. Don't take over any building in the first days, it will only give you a hard time with looters, as they will know where to find you. Take your time to gather your stuff while you find the perfect spot for your new home. I like to spot those friendly and unfriendly camps, while staying out of the way of the later for now.
My usual early game strategy is to LVL up everything as fast as possible, choke hold the most Z as possible (+stealth), rip their clothes apart (+ construction) then bludgeon + bandage with your ripped clothes (+medic), then (hopefully you found a knife) skin them (+cooking). in the first days you should be LVL 2 or more in stealth/medic/cooking/construction. If your character doesn't care about it, skinning looter is an excellent source of food, especially if you are doing a lone wolf run. Cooked looters sells well to anyone and it's easy to gather.. but be careful while being in a community as cooking looters will depress most people.

Now that you've found lots of loot, haven't managed to die and make enemies, it's time to build. Unless you get extremely lucky in finding a nice and easy to take over camp. The easiest camps to setup are on the corner of the maps as they provide good defence, most of the time a good amount of raw material (rocks, lumber, animals) but depending your intentions, you might be far from cities for loot.
If you are opting on taking over a camp, plan ahead. If you have the option, find a small car, herd a pack of red/white strain toward the camp you want to get, it will create a nice distraction. Another one would be to sneak near it while there's refugee or any other community visiting and sneak throw Molotov at the camp, they will think it's the other party and they will attack them instead. While they try to kill each other, now's your chance to prepare your attack on the survivors. Again you will need a few Molotov to put them to sleep fast because you will more than likely not have the skills to go head on.

Now that you got your camp started, who do you want to work with. You need to chose wisely as some can have questionable personalities and drink all your vodka or being depressed because you ate their friend in a healthy meaty curry or omelette that raised your constitution like crazy. Some can also growl during the night... take them for a walk, choke hold and assassinate them, you don't want to mess with invisible strain in your camps.

Now for the TIP section;

• I strongly recommend you to find a few carrots, catering buckets and strings to make rabbit traps, they are an easy food supply. You don't need a camp to put those, just find a spot with some bunnies around and lay them there. You can put a marker on the map if you want to make sure where they are.
  
  
• Now that you have some bunnies; carry 2 bunnies with you while visiting neighbours. Most camps will give you the quest to catch bunnies for them. Since you'll already have 2 fresh ones, you'll be all good to go. Don't forget to buy back those bunnies after, you will need them for your next encounter. Plus you won't loose money and keep the rep.
  
  Jobs (or chores depending on how you see it..)
  
• So you have 1 guy in your group with high level? Some building can be operated without supervision like nitrary, kiln, still. You can task that same person to operate a few at the same time i.e you are in a mission to build concrete walls? build a bunch of kilns and let that guys start all those one after the other. Placing them in a bunch really help the path finding too.
  
  
• Farming: I strongly suggest to take a skilled worker to plant your crops, let those 0-1 star do the watering/harvesting to lvl up otherwise you'll get a very poopy yield. If you sit on a good stock pile and don't mind the first harvest to be very slim then your 0-1 star will just LVL up faster!
  
  
• Cooking: some basic meals can be done without supervision as well. You got back from a good deer, rabbit or looter hunt? prep 3-4 fires, lay those juicy steaks on the fires and let them cook, the time you will need to prep everything, the first one will be ready so you can continue until all your meal are done. you can do stews and anything that goes in the pot that way but they won't cook as fast as it would while being attended to.
  
  
• You know all those funky city props on the road? By that I mean signs, lamps, trash cans... You can dismantle most of them for resources, some will get you wood and some will give you steel. So you won't need to craft it!
  
  
  That's it for now, i'll get back for more! Cheers
  
  
  
  
  
  
  
  

Ok, the big question, how does it work?

Everyone/Zombie has 1 HP, then there's all the damage multipliers

damage received:
For zombies, depending on which infection they have, damage is multiplied by:
Green x1
Blue x0.5
Red x0.25
White x0.175
Invisible x0.15

For humans, for most types of damage if it's not a headshot, depending on their Constitution it's multiplied by:
0 stars x1
1 stars x0.9
2 stars x0.8
3 stars x0.7
4 stars x0.6
5 stars x0.5

Except for blunt objects against humans, if it's not a headshot, depending on their Constitution it's multiplied by:
0 stars x1
1 stars x0.85
2 stars x0.7
3 stars x0.55
4 stars x0.4
5 stars x0.25

Then, for headshots, it's multiplied by 2, and for leg and arm shots it's multiplied by 0.5 - unless it's an explosion or fire damage.

Then, for stealth attacks (where the enemy is unaware) depending on the attacker's stealth skill it's multiplied by:
0 stars x1
1 stars x1.4
2 stars x1.8
3 stars x2.2
4 stars x2.4
5 stars x3

Then the resulting figure is absorbed by the armor stat of the bullet proof vest, helmet or leg armor.
If you need the different type of helmet specs refer to this guide:
https://gtm.steamproxy.vip/sharedfiles/filedetails/?id=3485435236

And lastly leg damage is limited, depending on infection:
None: 0.4
Green: 0.001
Blue: 0.05
Red: 0.1
White: 0.1
Invisible: 0.5

Then you get to the weapon chart (see image) Please not that special weapons were not added. but Antique Katana and Special golf club would be the best Sharp/Blunt weapons.
Hope it gives you a better understanding on the ''HP'' Mechanics!