Soul Binding is the process of binding equipment to a player's soul. Some items must be bound to the essence of the soul in order to be worn. To see if it this is required, hover over the item in your loot, inventory, or profile window. The item will read Soul Binding Available. See Dolan's Shoulderplates for an example.
When you right-click to equip the item, you will receive a confirmation message to either accept or deny the bind.
Once Soul Bound, the item cannot be traded, sold to players, or stored in an Account or Legion warehouse.
If you no longer need an item you are bound to, you can discard it by using the Trash Bin located in your Inventory, sell it to an NPC, use the item for remodeling your upgrade, or use Extraction Tools to obtain Enchantment Stones from it.
Bind on Pickup items, also referred to as BoP, warn you they are untradable when you try to pick them up and are bound to you once received. They have the same restrictions of a Soul Bound item. For more information on these items, see Bind on Pickup.