You don't really equip a particular item in the traditional sense in this game. For example you could have 3 weapons in your hand and in any given combat you could choose to play any one of those cards. In effect you've got a bunch of swords strapped to your back and you are choosing which to use in a given situation - but it's best not to think of it that way as not everything from a card game will make perfect sense if you try to fit it in with a traditional RPG. For example you could have 3 different armors in your hand as well, all available to be used.
But keep in mind that you can only use 1 of any given card type per character per check. So even if you have 3 swords in your hand, you can only use 1 for your combat check. You can only use 1 armor to prevent damage from a particular check, etc...
The best thing to do is to not overthink it and just read the cards. Most cards will tell you exactly what to do with them - for example blessings will tell you to discard them (or in a few instances do something else). Usually the instructions are pretty clear on the cards.
I would say having it in your hand is the equivalent of having something equipped.
I would not ever use that phrase in this game.
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You only "discard as you go" if the card tells you to. Weapons, armor, and some items tend to allow you to keep it in your hand for a lesser effect, and discard it for a greater effect. Spells and blessings tend to be discarded for their effect, although some circumstances allow you to put those back at the bottom of your draw pile.
None of that is quite set in stone, though, and there are cards that break those rules. The cards do what they say they do...and the rulebook should explain what generally happens. You have a certain set of resources at your (both individually and as a group) immediate disposal, that being all the cards in everyone's hands. The cards you haven't drawn yet are generally to be used in the future...and the discard pile is generally comprised of stuff that has been "used" (either for its effect, or taken as damage).
Watch some of the videos from the official Youtube playlist, if you want or need more of a "walk-through" of the game:
http://paizo.com/threads/rzs2pz1s?Pathfinder-Adventure-Card-Game-video-play list
There are several where they walk you through the basics of the game, and others where they take you through an entire scenario.
You will get the hang of it!
The game may seem daunting at first, but once you get the hang of it, you realize it's pretty much reading each card carefully and doing what it says. The trick is not to forget to read every card that may be relevant each turn: In other words, read your character card for relevant powers. Read the Adventure path, Adventure, and Scenario cards. Read the Location card. Read the card you encounter, and read any card you intend to play.
Every card will tell you what to do with it, and the list of outcomes is covered in the rulebook. In summary:
Reveal - Show other players the card, and put it back in your hand. (No damage taken since the card does not leave your hand.)
Recharge - Place the card at the bottom of your character deck. (No damage taken since your deck (health) is replenished.)
Discard - Place the card on top of your discard pile next to your deck. (Damage is taken, since your hand and deck are reduced, but the discard pile can be healed in different ways.)
Bury - Place the card under your character card. Buried cards are unavailable for the rest of the scenario. (Permanent damage to your health.)
Banish - Place the card back in the box. Banished cards are gone for good unless you encounter and acquire another one. (Permanent damage to your health.)
Some cards may tell you to do more than one thing, such as a spell which may tell you to reveal the card, do the action, then discard the card.
Some cards can be recharged, again... such as spells. Where if you make a check or certain other conditions apply, you recharge it instead of discarding it.
Some cards may give you a choice: Reveal to do one thing, or discard to do a different thing. Some cards, like some weapons may let you do more than one thing, such as reveal a weapon to add 1dX to a check, and additionally discard it to add another 1dX.
In the end, carefully reading the cards will tell you everything you need to know. And when there is confusion on how a card is worded, you're likely to find a discussion (and resolution) about it here.
If the card says Reveal you show then put it back in your hand.
If the card says Display you leave it out in front of you.
Page 10 in the rule book.