An encounter isn't just rolling initiative. It's any challenge that drains party resources. Combat against giants or dragons demands immediate resources. Hazards like traps, lava flows, and cursed zones force creative problem-solving or resource spending. Social trials - bargaining with demons, navigating a vampire court - test negotiation and sometimes expose weaknesses. Exploration challenges like forced marches, freezing weather, or food shortages grind down morale and supplies.
Each encounter nudges the resource dial down. Hit points tick lower, spell slots empty, potions get consumed, morale frays. Your role as DN is deciding how hard to push that dial.