Creating cool characters is all fun, but it's just the first step. After all, you're not going to let them run around in rags the whole game, are you? We can talk about looking past appearances all day long, but in the end cloth makes the priest. From the humble brass lantern to the fanciest royal scepter, equipment is a big part of roleplaying games, and can be an even better indicator of progress than the increase of some abstract numbers.
In Battles&Balances, all items a character can wear, wield, consume or otherwise use are treated the same way. They all have a number of attributes, and which of them have meaningful values determine what kind of an item it is. For instance, if it has a protection score greater than zero, then it can be used as armor, regardless of what other properties it may have.
Speaking of which, some items are special in that they can be equipped. As we'll see in the next chapter, there are three slots the combat rules care about: weapon, shield and armor. To keep things simple, the latter is treated as a whole, as opposed to keeping track of boots, helmets, greaves, pauldrons, breastplates... you get the idea. But if that's the way you want to go, just keep in mind that protection scores add up quickly, especially if you also allow for upgrades, and that can unbalance combat unless taken into account.
Weapons are a little more complicated. An item with an attack score greater than zero is a ranged weapon. An item with a damage die greater than zero is ammunition. An item with both attributes is a melee weapon. Either way, a character can only equip a weapon in their main hand; there are no provisions for dual-wielding at this time.
Conversely, shields are always one piece, and defined by their defense score.
Equipped items have another useful trait: their weight doesn't count towards a character's carrying limit. For their other belongings, it's assumed each character carries some sort of bag. You can require one explicitly if you like; the game rules only care that as long as a character is under their carrying limit, they can always pick up any item that's portable (by them). In other words, it's a soft limit, not a hard one. But it does mean they can drop an item and not be able to pick it back up.
As per the rules outlined in chapter 2, an average human can carry 3x8x3=72 units of weight. That seems like a lot, but it's not. Baggage adds up when characters have to carry spare weapons, spare armor, lots of food and who knows what else. You can always fudge values though: very light items like pieces of parchment can weigh nothing, while others get heavier than they should be in compensation.
That said, what's a good weight? For weapons, 1 to 4 -- think rapiers versus two-handed swords. Armor should weigh more, 6 to 12 at least, and probably above. It depends on how fast you want it to fall apart (if you're using the optional wearout rule), and how many spares you want characters to carry with ease. Items one can consume, such as food and potions, should be somewhere in-between, unless you want characters to stockpile a *lot* of it, or there are other things that take up space in their bags. If that's a problem, give them multiple uses. It kind of assumes the container weighs more than the content, but gameplay trumps realism.
It really depends on the game, but as a general rule the ideal attack score for a weapon, or defense score for a shield, is about half the size of the character wielding it, give or take a couple of points; you can go higher for characters with a lot of dice in agility. The damage die is more restricted, but keep it to 1d4 for knives and the like, 1d6 for axes and swords, or 1d8 for heavier weapons. (Of course, that doesn't account for giants wielding entire tree trunks as clubs.) Either way, you probably shouldn't let any character wield a weapon with an attack score bigger than their own size.
So weapons are defined by two numbers: the attack score represents their reach and precision, while the damage die accounts for points, blades, spikes or simply weight. But that still makes upgrades a no-brainer; to make things interesting, you also want to keep track of other traits. A poisoned dagger or flaming sword spring to mind, but those are probably the exception. All melee weapons, however, can be loosely divided into piercing (or thrusting), slashing and blunt.
This opens up many opportunities: some types of armor could do worse against certain weapons and better against others, requiring some preparation before a fight. More importantly, the more steel a weapon is made of, the more expensive it will be... and the more skill it will require. That's kind of important, because you see too many games that tout "historical realism", but everyone in them is running around in plate armor, toting swords. Folks, that stuff costs a lot, and takes long arduous training to use well!
By the way, speaking of realism, in case you're wondering whether swords count as slashing or piercing weapons, most kinds were mainly designed to stab the opponent -- even the Japanese katana! (Some of them, like most rapiers, don't even have an edge at all.) Exception were various long, curved swords designed to be used from horseback.