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When you obtain items, they are put in your backpack. If the allowed number of slots in your backpack is full, all excess pieces you collect are automatically stored in your bank, which can be accessed from your dormitory or castle.
Each Wizard's bank holds up to 150 equipment or housing items, while the shared bank can hold up to 100. The shared bank can also hold up to 999 of every kind of reagent and pet snack, and 100 jewels. Unlike your Wizard's personal bank, anything stored in the shared bank may be accessed by any Wizard on your account.
Thus, you may choose to store some items for safekeeping, or transfer them to other Wizards on your account to use in their adventures.
Each Wizard also has access to their own attic, which can hold up to 100 housing items, seeds, or pets. The attic is not a feature of each individual house, but is shared among all houses owned by your Wizard. So buying another castle will not add 100 more storage slots.
Additional storage space can be obtained by purchasing or crafting the Gear Vault, Jewel Vault, or Seed Vault housing items.