There were no classes, no levels. None of this "level 99 guy one shots level 1 guy". Skills did give advantages, but it was nothing that drastic. No real need to farm mobs to get items, as they weren't that important to begin with. Magical weapons did give a minor advantage, but were rare and you could lose them, so most of the time an old fashioned steel sword would suffice (bought from NPCs or crafted by player blacksmiths). Items mostly mattered in quantity: lots of ore, wood, reagents, money, etc.

You learned skills by using them. So, if you wanted to hit things better with a sword, you went out and hit things. If you wanted to become a better magician, you had to cast spells. Wanted to become a better tailor? You had to make lots of clothing :) That wasn't perfect and later gave rise to macroers, but the system itself is awesome.

Death was meaningful: you lost everything you were carrying (changed in later versions with the 'insurance system'), unless you made it back to your body before it decayed and noone got to it first. And your ghost had to find a healer (or a player mage or highly skilled healer) in order to get resurrected. And, while dead, you couldn't speak to anyone, except players with 'Spirit Speak'.

You could own houses (which did occupy real state, they were not instanced), to have a safe place and a way to store items. That eventually became a market by itself, as the world was finite.

There were just a few safe zones, all the rest were automatically PVP areas. Even in "safe" zones, you could get mugged or killed if you didn't pay attention, as you had to call "guards" in order for them to appear (other people could call them for you, so it wasn't wise to leave your character in an deserted place and leave the computer).

You could steal from other people's bags - and get caught or not. You could even steal reagents from mages and prevent them casting. Yes, you had to carry a supply of reagents to cast and could run out if you didn't pay attention, possibly leaving you stranded.

You could create weapons, furniture, potions and whatnot from basic materials. This is very different from, say, WoW crafting system - you didn't have to wait for any drops from monsters. In fact, you didn't have to kill anything (not counting maybe birds for feathers, to use in arrows, or leather)

They even experimented with real ecology and a food chain in the beta. That didn't work, because players are too predatory.

Basically, they did almost everything very differently from MMOs that came later. The end result is that the world felt more 'alive', as you could interact with almost anything, given the right tools. See trees and got an axe? You could chop them. No axe? You could mine those rocks over there, smelt at a forge, then build the axe. And so on.