Loot Bags are the kids-friendly version of bloody corpses in Creativerse.
They do not have a collision mesh and such will not prevent players or Creatures from walking "through" them. Several Loot Bags can even be placed on the exact same spot, overlapping each other.
Since update R41 in spring 2017, Loot Bags are affected by gravity and will fall downwards until they are stopped; they can roll down steps, stairs and slopes, and will sink down to the ground of any kind of liquid, including liquid Lava.
Luckily, Loot Bags are indestructible. However, they will still vanish - even without being destroyed - after ca. 5 minutes all by themselves, or even sooner if all players leave the area.
Loot Bags cannot be destroyed by TNT types nor can they be removed by Excavators. You cannot push Loot Bags with your ArcTek Gauntlet (not even with a Gauntlet Smash). Block Phasers will ignore Loot Bags, and melee Weapons like swords will go through them, but not faze them.
Teleporters can not teleport Loot Bags. In fact, if Loot Bags should happen to drop right on a Teleporter, these Loot Bags can usually only be looted after picking up the Teleporter first.
However, Loot Bags can be pushed away by the pressure of explosions of certain Explosives like Stun Bombs or Explosive Bombs (not by ranged weapons like Vlad-a-Rangs or Shur-Ice-Ns though), and also with Fans. This will enable you to build kill-traps that will transport Loot Bags to a certain position for comfortable collection. Blizzard Bombs can push Loot Bags a little when they detonate, but will not lift them into the air.
Loot Bags can be displaced, mainly when Creatures die in liquids. For example after you have pushed a Creature into a liquid where they will drown, then the Loot Bag might appear at the place on the "shore" outside the liquid from where you gave the Creature a push.
If a Creature seems to just "disappear" when dying without exploding into small cubes of light and other effects, this will usually indicate that you will have to search for the Loot Bag somewhere else where the Creature has been to before - or else further up on top of a tree for example.
Currently even visitors on player claims and game worlds can loot the Loot Bags of Creatures, even though they cannot kill Creatures with melee weapons, only with Explosives if they can obtain these (like from certain randomly spawning Treasure Chests or from other players).
How to obtain
Since 2018, also all Ghost Creatures will always drop one Ghost Loot bag. However, Creatures spawned on Mob Spawners will not drop any Loot Bags if they haven't been provided with specific items by players. Only the first Creature that is spawned with a Mob Spawner will then drop all the items at once when killed.
Please note that Creatures will not drop Loot Bags if they are killed by burning away in blue flames after being hit by sunlight (which only applies to Night Creatures and certain underground Creatures) or when Creatures simply despawn after all players have left an area.
Since update R50, Creatures will now also drop Loot Bags if they drown, freeze to death, burn to death, die from being corrupted or purified - only Corrupted Creatures are vulnerable to purification from Mineral Water, Healing Beacons, Purification Bombs and the like though.
Loot Bags will not be dropped by Night Creatures and sunlight-sensitive Creatures that burn to death in blue flames in sunlight, except if player-characters manage to hit them often enough before these Creatures are finally completely consumed by flames.
Loot Bags will also not be dropped when Creatures despawn not long after all players have left an area.
Usual contents of animal Loot Bags
There will always be at least one item in any Loot Bag, most often 2-4 item stacks.
All common Creatures except for Leafies will always drop 1-3 units of a specific animal material that is typical for their species (like Feral Pigsy Fur or Trog Horns for example, or Arcstones dropped by all types of Keepas and Leather dropped by many types of Pigsies, etc.).
Moreover, some Creatures will sometimes drop crafting materials like Vines, sometimes natural blocks like Leaves or Flowers, but only very rarely liquids - namely Molasses that is dropped by Arctic Creatures.
Specific types of Creatures are able to - rarely - drop rare Recipes and/or certain types of equipment.
Other types of Loot Bags
Loot Bags can also be dropped from Excavators of all kinds when they will save half of the blocks (and/or objects) that they remove from an area of up to 7x7x7 blocks size since update R22 on September 16th 2015.
Players can drop purple Player Bags if they open their inventory/bag and drag stuff from their inventory or quickbar over the bag icon (not the dustbin, or the blocks/items will be destroyed!). As long as player characters don't move, more stuff can be dropped into the same bag when dragging it over the bag icon.
This is usually done to exchange items with other players that they can then pick up. Make sure that the other players are close by and will take the items soon, and if the other players go away, then either stay with your loot bag until they return or pick up your stuff again. If all player characters leave the area where the player bag is, the bag will vanish after a very short while!
Loot Spawners are machines that can make Loot Bags appear, but only with the content that players fill in themselves when setting up Loot Spawners. If no custom loot is applied, no Loot Bags will spawn. Loot Spawners are intended to help with player-made Adventures for other players to enjoy.
Looting Loot Bags
Simply activate Loot Bags by looking at them (with the cursor) and clicking your right mouse button or typing "f" by default. These controls are customizable. You can right-click on any stack of items that you want to take or simply type "f" again to loot everything that the Loot Bag contains.
Upon looting a Loot Bag completely, players will receive the content, but no bag additionally to that. This is just the same principle as with the randomly spawning Treasure Chests - these will also not provide players with any kind of chest nor container, but just with their content.
Loot Bags can despawn
Unlooted or half-looted Loot Bags will usually vanish by themselves after a bit less than 5 minutes, even if player characters are close by.
If all players leave the area, then unlooted or half-looted Loot Bags that are left alone will very quickly vanish - together with everything that they (still) contain. This also happens to player bags, Ghost Loot bags and Holiday Loot Bags.
The content of lost Loot Bags cannot be retrieved afterwards (different from Death Statues/urns).
When player-characters dismiss their Pets, the Pets will also drop Loot Bags and vanish. Loot Bags of Pets will only contain animal-typical materials, but no pet-specific materials like Pigsy Droppings or (Chizzard or Blizzard Chizzard) Eggs that can only be received by harvesting from the according Pets.
Since peaceful Creatures nearby will flee upon witnessing dismissings and the Pets concerned will not ever show up again, this means dismissing is very obviously just another way of killing Creatures; despite Pets being "immortal" and indestructible otherwise.
If other players are allowed to feed and harvest from Pets by setting the Pets to other permission ranks than "Just me", these players can also (theoretically) dismiss and such "kill" these Pets. Also world owners can (theoretically) always dismiss Pets of all the players on their gameworld.
Until 2016, Loot Bags were able to hover in the air just where a Creature had been killed or where an Excavator had "dropped" its saved content.