The bare hands skill is used when attacking while wielding nothing. Every class has this skill, except Monks and Samurai, who instead possess the superior martial arts skill. The following information may not apply to Monks, who can be powerful fighters even in the absence of a weapon.
While a desperate player may need to attack with bare hands from time to time, the need is so rare and the benefit so marginal that this skill should never be enhanced by most characters. Carrying some form of ranged attack will greatly reduce your need to resort to bare hands.
Bare hands do 1d2 damage to both small and large monsters. Both Basic and Skilled yield +1 to damage, Expert gives +2 to damage. Monk's and Samurai's Martial arts skill does 1d4 damage, with much greater bonuses for skills.
Attacking with bare hands causes silver damage if you are wearing a silver ring and no gloves. However, bare-handed damage is so poor that only a martial artist should bother doing this.
Bare hands skill