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All players initially start out on a continent covered with forests, lakes, mountains, and various natural resources. All objects in the game, such as buildings, towns, roads and items, are created by players. Wurm Online features a deformable three-dimensional landscape allowing the players to create pits and hills and to flatten and shape the land. The game world features a separate three-dimensional rock layer that can be mined into to create underground caverns or tunnels.

Wurm Online's design allows for the building of communities within the game. Founding a village allows a player to recruit citizens, and these players then share a common chat system restricted to their villagers only. Co-operative gameplay allows players to work together in a way that is not dictated by restrictive story lines. The rules of conduct for the game vary slightly depending on the server; either a PvP (wild) server or a non-PvP server.

Wurm Online includes are harvesting and crafting system. Crafting components, such as ore and timber, must be searched for. Each type of harvesting requires its own skill, such as mining or woodcutting. Players can also hunt animals and catch fish for meat. Once the resources have been harvested, they can be crafted into items. Most items require multiple steps with raw materials and items produced from other skills.

There are two different account types on Wurm Online. All players start with a free to play account which allows them to play on the Golden Valley entry server. This account is not time limited, but the player cannot increase skills above 20 or play on the premium servers. The Golden Valley server adds some additional restrictions, for instance players cannot buy village deeds or build towers. This server is 4 times smaller than the premium servers. The current premium servers are the Wild server and the Independence server, which is the first of the Freedom servers. To move to a premium server players must first buy premium time for their account.