What exactly does lighting a bonfire in Dark Souls 1 do

There is an NPC, Kingseeker Frampt, that will consume your items in exchange for souls. He appears near the Firelink Shrine after you have rung the two bells. So yes, there is a way to sell item, but not until later in the game.

However, there is almost no limit to the number of items you can have in your inventory (see this question Is there a limit to the number of item in inventory?). You can hold up to 1984 different items in your inventory, and if you purchase the Bottomless Box, from a merchant in the Depth, you can store all those items in it and have a manageable inventory.

However, I think you should just drop the duplicate items because the resell value is really low. This table, from one of the Dark Souls wiki, shows how many souls you'll gain from each class of item:

Weapons                    50
Armor                      100
Dung Pie                   200
Cracked Red Eye Orb        500
Copper Coin                1000
Some unique items          5000

Even if you resell 1000 longswords, you'll only gain 50000 souls. Compared to the time it will take you to sell all of them, and to manage your inventory, I think it is not a good trade-off. There are quicker ways farm souls.

During your second play through, reselling some of the unique items may be a cheap way to get some souls. However, reselling basic items does not seem interesting to me.

It is the amount of damage reduced. For example, if a shield has a physical damage rating of 100, 100% of physical damage is reduced when blocking. This also applies to the other types of damage (fire, magic, lightning) that shields have ratings for as well.

This is not to be confused with the attack rating that all shields also have, which is the amount of damage the shield would do if you used them to attack instead of blocking (you can use shields as a weapon if you equip them in the right hand).

Note that if you ever feel like doing this, all shields deal strike damage.