Life, as the name says, is your energy. Every combat action you take requires Life, which means that when it runs out you cannot engage in combat until you recover, so make sure to spend your Life wisely by checking the amount each battle requires of Life before accepting to join. If you are unsure if you can win or not, some battles allow to sneak in and check the opponents team before spending any Life
The good news is that Life recovers automatically without the need for you to do anything. You can check your Life status in any screen by tapping on the Life icon as you can see on the picture and you can also buy Life with Diamonds by clicking on the "+" icon right next to it, but remember there is a daily limit to how much Life you can purchase with Diamonds.
You recover 10 Life points every 8 minutes and you can also earn extra Life points through Quests and Daily Rewards.