Note: time doesn't pass while the rucksack or character screens are open.
The default size of the rucksack is 25,000g, however, catching and storing butterflies using a net increases your ability to carry more weight. Clicking an item in the rucksack selects that item, and clicking a selected item deselects it. Pressing C will clear the selected items. Pressing a number key (1-9) while an item is selected binds the object to that number key and (in the case of tools) also allows you to use your mouse scroll-wheel to rotate through the "numbered" tools when outside of your inventory.
Five buttons can be seen on the bottom of the rucksack inventory screen:
The first button (gear/checkmark icon) is "Use" (default keybinding is E). Pressing the use button with one or more items in the rucksack selected allows you to make new items. For example, using meat while standing facing a fire cooks it, making fried meat. Some items, like bone and bloodleaf have no known uses.
The second button (mouth icon) is "Eat". Not all items can be eaten, but consumable items usually reduce your hunger or thirst, although some cause other effects and are damaging to your health.
The third button (hand icon) places the selected item(s) into your hand (default keybinding is T). An object in your hand can be used while in the game-world. Planting seeds, fruit, or other objects in your hand is done by placing the object in your hand using this key and then using the E key. A tool in your hand can be used to damage things faster than your empty hand, or you can use the tool for it's purpose, such as using a hammer to build things.
The fourth button (plus icon) is combine. when two or more item are selected, using the combine button may cause those items to be joined together to make something new, if those items are part of a "recipe", such as a tool or a weapon, such as a spear.
The last button (X icon) is drop. This drops one or more items on a selected square on the ground. The ability to drop multiple items at time is limited to stacks with large numbers of items in them. You can also also drop an item by simply dragging it out of the rucksack window.