Summary
A midpoint between full item drop-on-death and zero drop-on-death.
Core concept
With this setting on, all items that are collected in a specific area outside of Town (like the Mines or Forest) would be dropped from the player. This could be achieved by tagging an item with a location tag that is only removed when they have safely exited the location. If the player dies with the tagged items on them, they will be lost to the world again.