Note that most quests reward an item, so you will need to have at least one free slot when turning in a quest, otherwise you will be unable to complete it. Instead, you will be unable to pick up any more items. Unlike in the single-player TES games, encumbrance is not a factor each item takes up a single space, and it is not possible to become overencumbered.
The maximum inventory slots can be increased by 5 to 215 by purchasing the Bristleneck War Boar, Mournhold Packrat, and Explorer's Pack Donkey pets from the Crown Store. Additional storage space is available at banks, where account-wide and guild-wide inventories can be accessed. Each character starts with 60 slots, which can be increased to 200 through pack upgrades and riding skill. The inventory system in Elder Scrolls Online is slot-based.