Companions are allies to the player character, and can join the player in battle. You must have 2 companions with you when you start any single-player mission.
Companions can gain new gear by completing companion quests obtained in the Tavern.
Currently the gear upgrades go in the order of: Shoes, Pants, Chests, Gloves and Weapons. The new gear can have random secondary stat rolls.
Companions are leveled up with the Companion Experience. It is earned from anything you do with your companions, unless your Tavern is full. You can level them up to the level of your Tavern. You can increase their level and enchant their Gear while in Town from the Tavern screen, or if you are mid-mission, you can click on their names beside your character info in the top left of the screen and get access to their information page.
They also gain Loyalty as they travel with you. They start at Stranger and need to be at least Friendly to give you their gear quests. If you want to build loyalty, you can get it from doing Missions for stamina, using up your 20 Arena battles a day and fighting in the Hall of Trials.
There are currently 4 companions in the game: