Artifacts are items that can be found on the Adventure Map, obtained from objects on the map, defeated enemy heroes, from previously dismissed, retreated, defeated in battles with neutrals or disappeared after losing the last town heroes in a tavern, gifted by an allied hero, bought from the artifact merchants or got as a starting bonus. Special artifacts, such as Spell book, War machines and Grail have their ways to be obtained. When a hero picks up an artifact, it disappears from the map and takes its place in an appropriate slot. If the slot is not free, the artifact is stored in the hero's backpack. The backpack can hold up to 64 unequipped artifacts and when it is full, no more artifacts can be picked up even if its slot is empty. Any artifacts obtained from creature banks or defeated enemy heroes without the free space in artifact slots or in the backpack will just disappear. Artifacts from creature banks taken with a full backpack will fill all the free slots, but it not always works with artifacts from a defeated enemy hero.
If a hero without free space in a backpack is trying to dig, he's getting "Searching for the Grail is fruitless. Your hero could not carry it..." message without losing movement points. The problem of the full backpack can be solved by Artifact merchants or Altar of Sacrifice (the last one is for good or neutral-aligned heroes only).
Equipped artifacts usually enhance a hero's abilities, either by increasing primary skills, movement, morale or luck, enhancing secondary skills, or providing immunity against a particular spell. However, equipped artifacts may also provide extra income for the kingdom or increase the productivity of creature dwellings in towns. Two similar artifacts will not stack their effect except for Quiet Eye of the Dragon and all the resource-producing artifacts.
An artifact placed on the Adventure Map can also be guarded even though it has no apparent creatures guarding it (this mechanics is not used in mainstream PvP templates). When a hero attempts to pick up a guarded artifact, text appears asking whether or not the hero wants to attack the guardians. If the hero manages to defeat the guardians, he will receive the artifact. If he is forced to retreat from the battle or dies during it, the defeated guardians will not regenerate. It should be noted, that if the map maker has set guards for the artifact without a text, then no question is asked and the guards attack immediately.
Equipped artifacts are placed on squares on hero menu called slots as seen on the picture below. Slots represent different parts of the hero's body, and every slot can hold one artifact at the time.
Combination artifacts consist of several regular ones. When equipped they block all the slots belonging to their parts, but take just one slot in the backpack.
There are 12 combination artifacts in Shadow of Death (Armageddon's blade works as a combo in the campaign only). Traces of 3 unrealized ones are in the game files: it's Diplomat's Suit, Mire of Neutrality and Ironfist of the Ogre. They were introduced in Horn of the Abyss as Diplomat's Cloak, Pendant of Reflection and Ironfist of the Ogre, alongside with Golden Goose as an hommage to Heroes of Might and Magic II.
See:
Artifacts are split into 4 categories roughly rating their power and usefulness. The Class rating is not listed on the item in the game, but it afflicts the chances to get an artifact in creature banks and the strength of guarding units on adventure map. The map editor allows the placing of a random artifact by the certain class, allowing for creating a variation in that map from one play through to the next.
The 4 classes are Treasure, Minor, Major, and Relic. Their AI values are 2000, 5000, 10000 and 20000 respectively.
Only Treasure class artifacts are used for quests by Seers at randomly generated maps, but the map maker can choose an artifact of any class for this.
Spell scrolls have no class and their AI value is 500 for the 1st level spell scroll and 2000/3000/4000/5000 for 2nd/3rd/4th/5th levels.
Note: in Horn of the Abyss, the values of 4th and 5th level spell scrolls were raised to 8000 and 10000. Town portal, Water walk, Fly and Dimension door scrolls' AI value was raised to 20000.
and Armageddon's Blade 
, there are just four misc. slots.
Ballista (or Cannon 
First aid tent.
Spell book.
