This Article is Referring to Morrowind
When attacking with your hands, you will be damaging the opponents fatigue instead of their health. Once their fatigue is lowered all the way, they will fall to the ground. While lying on the ground, you can continue to hit them, which will then start to damage their health until they stand back up. Once they are back on their feet, just punch or claw them one (maybe more depending on your level in Hand-to-Hand) more time to "knock them out" or back on the ground so you can continue to hurt their health until they are defeated.
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