Early on, you may as well sell your drops to an NPC merchant for a couple reasons. First of all, most of the drops are "trash drops" and have no real value beyond what the NPC will give you. Aside from that, the few decent drops you do get (in chests and such), are only viable to folks of your level and since nobody stays in tier one for very long, they have very limited resale value. In addition, other new players at that level have very little money so how much could you get for something that someone did need anyway!
Now then... when you are ready to sell goods to other players, there is a system in place. When you leave the island, you will get an apartment in your new home town and in that apartment you will be able to place a "seller's board". It looks kind of like a cork bulletin board and hangs on the wall. (You used to have to buy these but I think they give you one now when you first rent the apartment.) Once you have your seller's board mounted in your apartment, you will be hooked into the broker system that runs throughout the game.
Also in each apartment is a "house vault" consisting of two slots that work just like your bank slots. To sell things, put a couple bags or boxes into those slots and then put the things you want to sell in the bags/boxes. (I keep a couple of 28 slot boxes in my house vault which lets me have about 50 items up for sale all the time.)
Once you have some stuff in your house vault, you can open up the seller's board and price the things you have up for sale. There is also a tab in the seller's board window for the items you have in your personal inventory and you can sell this stuff too.
The difference is that the stuff in the vault stays available for sale for 24 hours even while you're offline and out of the game, while the things you sell from personal inventory only stay listed while you are online and standing in your room. If you leave the room to go crafting or adventuring those items are no longer listed on the broker for sale.
After you have put things up for sale, other players will be able to see those items on the various brokers and buy them from you. If you are standing in your room and selling, they will be able to come and buy from you "in person" through the game interface. (You don't need to actually interact with them, it's all automated, you just need to be online.)
Simple, eh?
Edited, Sun Mar 12 14:58:55 2006 by OldBlueDragon