You don't die from hunger and you don't drink water, but food is important in increasing your health and stamina to be able to fight, move, build, farm or do anything. Temperature is important at night time because getting cold makes it harder to regain stamina, and without preparation you get hurt in the mountains biome as it's too cold. You can craft clothes/armor to increase your defense to fair better against enemies, and there is a detailed structure building system in which you must obey the strength of each part otherwise it will collapse, and fire is important for sleeping as well as staying warm in the cold. You can craft different colors of a cape later on in the game, otherwise all the armor can't be colored but changes your character quite a lot, and there is some variety in capes later on.