From The Heretic Knowledge Vault
Generically, someone who makes a living by relieving others of their wealth, typically at gunpoint. However, in the Poe-verse, there's a more specific meaning: a member of the gangs of such extralegal entrepreneurs that populate Farrel, Jon Amraphel's home turf.
How Bandits operate
As explained here by Jon, bandits are a natural outgrowth of the sort-of-libertarian social system in Farrel. Lacking a central government and militia as in Veracia or Tsuiraku, the Farrelians get security (police forces, private guards for the rich, etc.) by recruiting mercenaries on a local level, from the various mercenary guilds in the country. (The Gewehr Wraiths started as such a guild.) The problem is that this private-cop gig is so attractive that there are always a lot more people wanting to do it, and getting trained in the tools of the trade like violence, than there are job openings. The ones who don't find jobs, and also the ones who get fired from paying work for some reason, go into business as bandits -- serving the useful social role of giving the paid cops/guards/etc. someone to protect their employers from, which promotes job security. (Sarine's reaction to this explanation is just what you'd probably imagine it to be.)
The resulting "career offenders" congregate in small groups that waylay travelers, rob from the rich and give to themselves, and so on. Jon seems offended at this practice, for reasons we don't fully understand; according to his mother, his father met his end at the hands of people "no different than" the Gewehr (and Jon), but we don't know whether the perps were actual bandits or simply combatants in a gang war. Judging from the way Jon treats bandits, it's probably the former.
For such a socially prominent bunch, they're surprisingly poorly armed. When Jon, Sarine and Meji encounter a bandit band outside Thranel en route to the Giant Magic Potato, Jon observes, with a bit of a sneer in his voice, that their armament is limited to "a couple of rifles, single shots ... and a few knives." The subset of their group that try to mug Ian only have a single rifle among them, which Ian turns against them via a Heat Metal spell. If they'd had a little more firepower, the whole story line might be turning out differently. Or not.
Such bandits as have appeared in the story to date generally seem well equipped to terrorize garden-variety human beings in their paths. However, when they run into important people like Sarine, Jon, Meji and Ian, they're toast.