There are a variety of ways to be revived once the demon army has vanquished you

 

Respawn in Town

similar to the /resign in GW. When you die and pick this option you return to town

There appears to be no penalty. This is also the case with a game crash or disconnection where you automatically arrive back at your last station (town) visited.

Re-Spawn

You respawn at the start of the instance as a fast moving ghost and after working your way closer to your death location (gravestone), you will respawn with half of your total health and no shields. You have a short period of time before you are attackable after respawning, just as if you had passed through a portal.

You will have reduced EXP gain for 5 minutes, this is about a 10% penalty. ( A countdown marker appears on your screen for this period).

Re-Birth

Revive at your headstone

You will respawn with full health and shields.

The only option which will require you to pay Palladium to respawn

Currently the penalty is not known