Changes

Equip your backpack to your torso. You can do this by pulling up you character window and dragging the backpack onto the back slot, or by right clicking and selecting Equip. There! Now you can carry more. It doesn't do that much good until you equip it. This wiki also covers other less intuitive uses of backpacks, mainly in crafting. The status bar also shows your backpack (and quiver) if equipped. You can open it from this icon as well (so you don't have to open the character sheet to access the backpack).