I have read the book through once completely. I’m still not understanding how damage is applied? I understand you take fatigue against your endurance. I’m not sure how you would actually die? If I understand it correctly you can still takes hits once your fatigue exceeds your endurance? Can someone point me to what I am missing please? Any help would be greatly appreciated.

When you have more fatigue than endurance, any hits on you are critical strikes. That's what you die from.

More precisely, here's how it happens.

1. You take a certain amount of Damage
2. Reduce it by your worn armor's resistance
3. If you are NOT incapacitated, you can (and usually must) "Defend" against the damage. To do so, you take Fatigue equal to the residual damage coming your way
   • You may chose to spend a Void Point to NOT defend against the damage, but we'll get to that later
4. If you are incapacitated, you cannot defend against the damage. What's interesting here is that the amount of damage does not matter here! When you do not defend, you "only" take a critical strike with a base severity equal to the weapon's Deadliness (and can be further modified in some cases, e.g. Striking as Fire or Razor Edged weapons)
5. When you are incapacitated, any critical strike renders you Unconscious (yeah, even a punch)
6. When you are Unconscious, the severity of all critical strikes you get is increased by 10 --> THAT's how you usually die

Side notes: you can take critical strikes while not incapacitated, either as a result of a double-opportunity spend by the attacker (allowing that the target is not in Earth stance) or from specific techniques or effects that inflict a crit regardless of your fatigue level. Spending a VP as mentioned above can let you soak a critical strike but as we saw, the damage does not matter and you won't take Fatigue. It is a worthwhile bet when the hit would incapacitate you and you'd rather fight another round even at the cost of a wound.

As long as your Fatigue is still EQUAL or lower than your Endurance, you can still defend against attacks.