Combat in Guild Wars affects many things.
"In Combat"
The game tracks whether or not you are "in combat". You enter combat when you attack an enemy, an enemy attacks you, you use a skill on an enemy, or an enemy uses a skill on you. You stop being in combat about fifteen seconds after any of these things happen and you are not suffering from any negative status modifiers such as hexes or conditions. There is no consistent visual indicator within the game showing whether or not you are in combat, although your avatar does assume a hunched up alert pose with more labored breathing as the default pose. Any other animation will override this pose, however. For example, you can be dancing while under attack and the game will treat it as being "in combat."
In particular, you cannot do the following things while in combat:
Natural health regeneration is not directly related to being in or out of combat. See health regeneration for more information.