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NPCs and players you can trade with will have a small icon before their names like the picture above-left. When you click on this icon, a half-window will appear.
NPC trading: When the window is opened from clicking the icon in front of an NPC's name, two sub-divisions will appear at the top of it. When the 'buy' option is selected, you can see what is in the NPC's inventory. Click on anything in the inventory, and then click the 'buy' button (top right corner of the table) to purchase it. Also, you can sell NPC's items. By clicking on the 'Sell' subdivision at the top, you can see equipment you're not wearing and items, which you may sell to the NPC. Be forewarned: NPCs sell at the full value of an item, but will only buy it for half.
Player trading: When in player-trading mode, you may only give the person an item or gold. You cannot forcibly take something from them. Entering a number in the text box, and then clicking 'Give gold' will give the person the number of gold you entered, while clicking on an item, and then clicking 'give' works the same way as for NPC trading.