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Equipped
An Item is Equipped when being held in one or both Hands, Stored in a Holster, or stored in a Pack Slot.
Wuntch's Waffling
You may be thinking, hey, why do i get the effect of an Item if its just hanging out in my bag or whatever? The Pack and Holster slots help represent easily accessible places on your character's body, think along the lines of a walkie talkie, easily able to press the button to talk or change channels while still attached to a belt, or a headlamp one flick away from being on or off. These are just two examples off the top of my head, your character may have any number of ways to easily access their gear so be funky with it!