In other words, a PC has a number of encumbrance "slots" equal to their strength score*. Exceeding that number of slots slows the character down. For example, a PC with 13 strength and banded mail armor (base move of 9") can carry up to 13 items and still move 9"; carrying 14 - 18 items reduces his speed to 6", and carrying 19 - 23 items reduces his speed to 3".
* Every exceptional strength category equals one more slot. e.g., a character with 18/76 strength has 21 slots. If you prefer to be more faithful to by-the-book exceptional strength weight capacities, you can arbitrarily assign a higher slot capacity to each category, e.g. 20 / 22 / 25 / 30 / 40.
In general, every carried item takes up one slot, but there are a few exceptions:
- Normal clothes, backpacks, and pouches take no slots. (Don't bother listing these things unless they're being stored as items to use later.)
- A weapon & scabbard count together as a 1 slot. Ditto for a quiver & 20 arrows, etc.
- Small identical items are 3 items per slot. So 3 iron spikes take up 1 slot, as do 3 vials of holy water, 3 daggers, or 3 potions of healing. (The items must be identical. Three different potions would take up three slots.)
- Every 100 coins / gems take up one slot.
In rare cases, a character needs to carry an extremely large or heavy item, like a massive chest, a rolled-up tapestry, or an incapacitated ally. These take up one slot per 10 pounds of approximate weight. Carrying another character will take up around 15-20 slots, plus the number of slots worth of stuff the carried character had, of course. Typically, this reduces If dragged instead of carried, it's generally one slot per 50-100 pounds.
Bags of holding can be rated in terms of this encumbrance system by dividing their coinage capacity by 75 to determine the number of slots it can hold.