There are 3 difficulty modes: EASY, NORMAL, and DESPAIR. That last one is unlocked after all classes are unlocked and it comes with its own unique title screen.
Difficulty affects the following:
- Your regeneration rate as human
- Your rate of HP loss as vampire
- How far noise travels
- How many items spawn
- How long blood pools last
- Damage taken from sunlight and water
- Damage from monsters (20% less in EASY, 50% more in DESPAIR)
- Critical strikes against you do 20% more damage in DESPAIR (on top of the extra DESPAIR damage and the 2x crit multiplier)
In harder difficulties, these rules lead to you getting surrounded much faster, taking more damage, recovering from fights slower, struggling more with hunger (if you rest to full HP), and having fewer resources to help you survive.