Items in your inventory may be assigned to a hot-key to facilitate the fast equipping of those items.
Once equipped, a watermark-style letter E appears over the icon for that item.
Equipping items on a pet requires that the creature first be added to the Alt+R Formation window. The item to be equipped must first be sealed in a blue Unit Card using the /union Combination window. Such an item will have a special badge-like logo superimposed on it.
Now you drag the sealed item from the Inventory window into the Formation window and drop it over an empty slot for the formed creature of interest. You may only equip two items per creature. Those creature equipped items may be enchanted, upgraded and socketed just like any item that your character might use.