Source Core Rulebook pg. 467
Your heroic deeds earn you Hero Points, which grant you good fortune or let you recover from the brink of death. Unlike most aspects of your character, which persist over the long term, Hero Points last for only a single session.
The GM is in charge of awarding Hero Points. Usually, each character gets 1 Hero Point at the start of a session and can gain more later by performing heroic deeds—something selfless, daring, or beyond normal expectations. You can have a maximum of 3 Hero Points at a time, and you lose any remaining Hero Points at the end of a session.
You can spend your Hero Points in one of two ways. Neither of these is an action, and you can spend Hero Points even if you aren't able to act. You can spend a Hero Point on behalf of your familiar or animal companion.
Spend 1 Hero Point to reroll a check. You must use the second result. This is a fortune effect (which means you can't use more than 1 Hero Point on a check).
Spend all your Hero Points (minimum 1) to avoid death. You can do this when your dying condition would increase. You lose the dying condition entirely and stabilize with 0 Hit Points. You don't gain the wounded condition or increase its value from losing the dying condition in this way, but if you already had that condition, you don't lose it or decrease its value.
Awarding Hero Points
Source Core Rulebook pg. 507
Unlike Experience Points and treasure, which stay with a character, Hero Points are granted and used on a per-session basis. At the start of a game session, you give out 1 Hero Point to each player character. You can also give out more Hero Points during the game, typically after a heroic moment or accomplishment (see below). As noted on page 467, a player can spend 1 Hero Point for a reroll, or they can spend all their Hero Points to recover when near death.
In a typical game, you’ll hand out about 1 Hero Point during each hour of play after the first (for example, 3 extra points in a 4-hour session). If you want a more over-the-top game, or if your group is up against incredible odds and showing immense bravery, you might give them out at a faster rate, like 1 every 30 minutes (6 over a 4-hour session). Try to ensure each PC has opportunities to earn Hero Points, and avoid granting all of the Hero Points to a single character.
Brave last stands, protecting innocents, and using a smart strategy or spell to save the day could all earn a character a Hero Point. Look for those moments when everybody at the table celebrates or sits back in awe of a character’s accomplishments; that’s your cue to issue that character a Hero Point.
The party could also gain Hero Points for their accomplishments throughout the game. For a moderate or major accomplishment, consider giving out a Hero Point as well. This point typically goes to a PC who was instrumental in attaining that accomplishment.