Food heals. Keep it and eat it. Sometimes only 1hp, sometimes more.
I don't think the crafting is fully implemented yet, but (assuming it is like D:OS) you should be able to cook up potion-like meals in future.
Does it only heal in combat, or did I encounter a bug? I gave some food when my character only had like 5 HP left and got nothing, so I figured it was just for decoration...man all that food I left behind!
