Damage indicator is a visual alternative to HP bar(and may complement one).
Usually the appearance/effect changes each 25%/20% of HP lost.
A.Wounds, bleeding. Severity depicts the HP loss.
B.Projectiles absorbed(e.g. arrows in a body). Provides a rough estimate of number of hits take.
C.Color change: entity color is darker or changes to reflect HP loss.
D.Change in speed/gait/direction:monsters flee/slow down/act more randomly/etc

Typically these are used for extra combat realism.