Bandage

Bandages are consumable items. The amount a bandage will heal for is determined by a character's vigor and healing skill.

Source
Bandages can be bought, crafted, or acquired as loot from chests and mobs.

Vendor
Bandages can be bought from a Trader NPC located at General Stores in one of the major cities, they cost per bandage and are sold in quantities of up to 9999.

Crafting
Create Bandages by using a hunting knife on the Bolts of Cloth (equip the knife, then use the ability at the bottom of the screen). Each bolt of cloth will yield 5 bandages, this requires no skill.

Bolts of cloth
Bolts of Cloth crafted from Cotton which will require the Fabrication skill.
 * 1) Collect Cotton (e.g. at Eldeir Village farm next to the marketplace or in Pyros' Landing (just outside the north gate).
 * 2) Go to a Loom, use the Cotton to craft the cloth. Each Cotton will produce 5 Cloth on sucess.

Loot
While not a significant source, bandages can be found in lockpicking boxes or as loot on these mobs:

Usage
To use bandages, right-click on them, select "Use", and select a target to heal. Alternately, players can drag the bandages to a hotbar slot for quicker use. When selecting a target, "G" is the default for targeting oneself.

Usage triggers chance of increasing Healing, Vigor, and Animal Lore skills, depending on the target being healed.