Scarlet Heroes relies mainly on reinterpreting standard old-school stats to produce a different play dynamic at the table. The most fundamental changes are in the way it treats damage differently for PCs and NPCs and the way in which it reads damage dice.
In Scarlet Heroes, damage dice are rolled exactly as you would expect for an old-school game. Swords do 1d8, fireballs do Wizard-d6, dragon claws do 2d6, and so forth. Unlike in standard OSR games, however, the dice are read differently. A die that rolls a 1 does no damage, 2-5 inflicts one point, 6-9 inflicts two points, and 10 or more inflicts four points of damage. Thus, a 1d4 dagger might inflict 0 or 1 points, while a 1d10 polearm could inflict as many as 4 points.
These points are subtracted from the hit points of PCs- and from the hit dice of NPCs. A mighty-thewed fighter who swings well with that polearm could do up to 4 hit dice of damage to his target, hewing down an ogre in a single stroke. Against a mob of enemies with comparable ACs, that same blow might lay out four common bandits, or a fistful of wretched kobolds.
This damage differential turns even a 1st level PC into a fearsome engine of destruction. A 1st level fighter in Scarlet Heroes with 8 hit points can now endure eight blows from most weapons and every time he strikes he’s laying low at least one or two petty foes. Heroes can now handle the kind of combat situations that would normally require a party of several adventurers to survive, simply because they’re taking much less punishment and dishing out far more pain.