Tools are the usable items and consumables that you carry with you, from your vital Estus Flask, to simple Throwing Knives, as well as curative items, tools with unique effects, and one shot items with magical effects.
Using any tools beyond the healing from your Estus Flask is rarely mandatory, but using them well can make the game much easier. Don’t be stingy with consumable usage, you can always find or purchase more. They exist to make your life easier, so use them!