Played a bit more, and so far liking it. I didn't notice effects to be extreme (maybe I didn't receive real beating just yet). First of all I think it adds a lot to NPCs - whenever it's their icon when looting, or talking to them, they feel like they belong in the surrounding far more. So far what I have seen on my characters was minor and appropriate - it made them belong to the enviroment.
I also notice that the dirt does translate at least into some clothing - for example tomb raiders had splashes of dirt on their clothing. I did notice that sorcerer's tunic is indeed clean all the time - perhaps the system hasn't been added to that particular item yet?
EDIT:
Logged backed in and notice Laelz was quite bloodied. Armor is bloodied as well - there were better shots with blood more visible on the armor during the conversation, but I found it tricky to capture.
![[Linked Image from i.imgur.com]](https://i.imgur.com/U7nISOn.png)
I think it's very nice. What doesn't quite click, is that Laelz looks like she took a beating - while it was the other way around. Perhaps blood from enemies/your blood should be slightly different?