Humanity allows you to return to human form (which gives you a higher rate of item discovery), allows you to kindle bonfires to gain 10 estus flasks, increases defenses, increases curse resistance and there are some conflicting reports about it increasing damage from weapons and some pyromancies. 

http://darksouls.wikidot.com/humanity

Are you starting the game? If so, you're not supposed to go fight the ghosts nor the skeletons just yet, since they're too much powerful for your character. You should go to the Undead Burg, which is located to the right side of the first Bonfire on Lordran after climbing up a hill and entering a sewer (fighting armoured zombies and a rat along the way).

Thanks for the advice Lestat. Helpful like always

But about the humanities, is it better to use them straight away? In demon's Souls, there was white/black world tendency. So if I were to die in human form, would it affect the world tendency (if there is any)?

I'ts also been reported that it changes how certain NPCs react to you.

Like covenants, it is belied that it has effects that haven't yet been discovered.

No world tendency as far as I've heard.

Yeah, the covenants supposedly substituted the World Tendencies. 

Yeah. It is widely thought that there may be effects coming into play when the global power relations between covenants change.

Not that anyone knows, and From certainly isn't telling.

Well they also didn't explain about the world tendencies in Demon's Souls as well, so they're letting the community find out for themselves. I kinda like that system.

In other news, started a new playthrough as a Depraved class. Just left the Asylum now with no deaths so far.

im a bit lost at the mo.
Ive gone through UNDEAD BURG and defeated the taurus demon and also gone through UNDEAD PARISH and took the dragons tail to get the Drake Sword (which is awesome), i defeated the metal tusk beast there and took the "mysterious key", i then sort of hit a dead end so headed back to UNDEAD BURG and went down the spiral staircase in which i came face to face with a big guard at the bottom so i deafeated him and went through the door and came out into DARKROOT BASIN. ive defeated a dark knight in this region and also found some leather armour. but im getting the impression i might be heading the wrong way or missing something.

Of course, it's part of what I like about the series as well, and probably a large part of why the online community for these games is so nice.

Oh. I hope that's true. Either way Im getting used to these quick movements and starting to like them.

The game itself is incredible of course.