Damage Counters are used in Dungeon Dice Monsters to keep track of the number of Hit Points each monster has left. Each counter represents 10 HP (or 1 HP, in the case of the Monster Lord) and is added as each monster takes damage. When there are as many or more damage counters on a monster than the monster has Hit Points, the monster is destroyed and removed from play by taking the figurine off of the board and placing it on its card, which is turned face down.
In the case of the Monster Lord, which always takes 1 damage for every attack, the Damage Counter is counted as 1 Life Point instead. If a Monster Lord has 3 or more damage counters on it after an attack, the player controlling that Monster Lord loses.