As per current wiki:
A player may create a Hardcore character - the true test of the player's skills.
A Hardcore character is the same as a normal character except for the following:
When a Hardcore character dies, the game ends and you cannot simply
reload your last save point because the character is gone forever.
When a Hardcore character dies, they are not removed from the
Character Selection Screen, instead remaining there as a robed figure
(as pictured) to remind players of their loss until the character is
deleted by the player.
Only the Items the Character has worn can be looted by other players
(if the player has allowed this before the character died). In
effect, the game treats you like a mortal human being rather than the
semi-immortal non-Hardcore characters, accordingly called Softcore by
Hardcore characters are displayed in a more aggressive pose in the
Character Selection Screen, depicting their tense state of play.
Hardcore characters get different Titles for beating the game.
Other than these, there are no other differences in gameplay terms. Dead hardcore characters will even retain whatever position on the Hardcore Ladder they may have achieved (albeit with their names in gray) until they have been surpassed by enough other players to knock them off of the Ladder. Hardcore mode is regarded by many as a more realistic playing experience.