Advantage/Disadvantage

I would not recommend putting this in place as a general mechanic. Instead, do this on a case by case basis. For example, an undead enemy may continue attacking no matter their damage. They may even ignore a missing limb and be just as dangerous in combat. There were mechanics in previous editions where certain monsters and races (orcs, for example) would fight harder when reduced to low HP. being near death would get their berserker blood up. So, make it situational. If you, as the DM, feel your monsters should be attacking with disadvantage, then by all means, make it so.

However, I would always make that sword double edged. If the monsters suffer disadvantage for injuries, the players must as well to maintain balance. I had a player lose an arm in my current campaign. If he had been a melee fighter, I would have given him disadvantage until he got used to fighting with only one arm. Lucky for him, he is a sorcerer, so he also avoided the chance of spell failure I would have placed on a Wizard with one arm

It was a failed Dex save on a vicious trap. It was very, very early on in the campaign. Perhaps session 3 or 4. There was an item in a recess on a wall. He reached in to grab it, failed his Dex save, lost an arm, and took permanent HP damage.

I did not give them any notice that something like that would, or could, happen. It was one of those beautiful moments as a DM, where all the players' eyes got wide. Things got real quiet. Furtive glances were exchanged. I could feel the, "oh my god he's serious". It was the moment when they first realized that seriously bad stuff could happen to their characters. It was the moment they realized they weren't playing a video game.

The best part is that this same player later attempted to attack an NPC I had specifically placed there as a plot hook and way to get a new arm. This NPC could have done for the whole party, but I played nice and took it easy on the newbie role players. They patched things up, and had to complete their second big quest with one arm. He now has a magic "robot" arm made from the bones of his severed arm (he decided to keep the arm and strip the meat off it it) and bits of a formerly animated suit of armor. This was custom made for him by the NPC, a grateful gnome artificer named Bixota Bob.

Ya I noticed and thats totally awesome, as far as heals from resting, do you expend hit dice or do you do a slower regeneration over time?

Both. I have them expend hit dice on short rests, up to the full amount. So if a player has 4d8 hit dice, they may expend up to 4 of them during a short rest. However, they do not regain hit dice until a long rest is taken.

On a long rest everything charges back up. They regain all HP, Hit Dice, spell slots, etc. I balance this by making it difficult or impossible to take long rests on a regular basis. I'll use terrain, enemies, environment, or plot points to keep things moving. I have also begun tracking rations and water supplies. I have them expend a day's worth of rations and 1/2 gallon (assuming a water skin is 1 gallon) of water on a long rest. If I keep them going for more than a day without a long rest, I will make them expend the same during a short rest; ya gotta eat some time.

In the most recent "chapter" of our adventure the PCs were traversing a maze. The maze was progressive (as opposed to labyrinthine; no wrong turns). It had 4 outer rooms and a central room. Each outer room contained an elemental that had to be defeated or avoided in order to progress. The central room contained the Elemental Golem (see the Homebrew Monster forum). It took 3 sessions to make it through this whole maze. I did not allow a long rest at any time. Some of the PCs are very low on rations, and some used their water skins trying to hurt the fire elemental. I kept the pressure up by saying things like, "Sure you can take a long rest. But I feel I should remind you that that is 8 hours, and you will have have expend rations and water." They are also on a time clock. They have to complete their current task within a year. 3 months were taken up in a sea voyage. They've now spent about 2 weeks on this island. Due to a very bad Charisma check, their ship has left, so they have no foreseeable way to get home within a year. All these things add up to a general reluctance to spend lots of time resting. This is by design.

It depends on what you consider "HP" to be. Is it physical damage? I don't usually break it out like that. I see a "Hit" on a character as many things. Sure cuts, lacerations, broken bones, etc. comprise it, but so does a "hit" to the armor of a PC that doesn't actually penetrate. The character might just have a nasty bruise on their ribs the next day.

Likewise, a "miss" isn't always mean a "Swing and a miss!" It could be it actually makes contact with the armor, but it's a glancing blow, or a hit that doesn't have much behind it.

That being said, I've ran into problems with players describing what happens on their hits. I've since taken to doing that myself. If it's especially nasty, and the player's put a lot of thought into their description-of-action, and they strike really well on the roll (or Crit), I may give them and/or the party Advantage (or any other condition that fits the situation) on that creature for the rest of the duration. The situation dictates the outcome, and it also rewards players for putting a lot of thought and creativity into their actions.

Example:

PC: "I swing my sword at the orc."
Orc AC: 13
PC Roll: 14
DM: "Your blade connects solidly on the orc's shoulder. Roll damage.

vs.

PC: "I bend my knee, dropping low, feinting high with my sword in an attempt to bring his defenses up, and then crack the edge of my shield into his exposed leg.
Orc AC: 13
PC Roll: 19
DM: The brutish creature falls for your ploy, and as he raises his axe to counter your feint, you seize the opportunity. Your shield slices across to land solidly on the orc's knee-joint. He howls in pain and stumbles back limping. Roll your damage, and then you can also take an Opportunity Attack since he left your threatened space, and the Orc's speed is halved for the duration.

Flaws are awesome rolepl a y opportunities. I talked with mitch about this a few days ago and we concured that h ou could do some awesomevthings with only one arm!