From what I could see, knock out and regular attacks do damage to the HP pool. So you could just damage them normally until they are low, and then down them with a non-deadly finishing blow to "not kill".
Question is, what benefit does this provide at the moment? Maybe some storyline choices later on?
Right know knocked out NPCS are treated exactly like dead ones. They never get back on their feet, the game never acknowledge that you spared them, etc.
We are all guessing (hoping?) that the system is not in place yet and Larian will expand it in the future.
