Player Death Knights are undead.

It's hard to explain, but I'll try to keep it simple. (don't wish to confuse anyone.)

Basically, the Player Death Knights, and DK's in general, are a kind of Lich. Meaning that they're immortal. Unlike most Liches, however, Death Knights don't have individual philacerys, (places to keep their souls.) Rather their souls were taken by Frostmourne. To kill a Lich, you must simply destroy its philacery, and since it's highly unlikely Frostmourne will ever be destroyed, Death Knights can't die.

If you think about it, Arthas was pretty slick (yeah I know blizz did it) in coming up with this idea.

@kalbuki

I like that explanation... and it seems to fit the creation of DKs, however... it doesn't seem to allow them to actually regain free will. If Frostmorne actually houses their souls, then I don't think the Lich King could actually lose control of them. As long as he had Frostmorne, he could command them directly, or if they turned from him, he could destroy them with a thought by purging their souls from his blade.

I'd classify them as 'risen'. Basically beings that died, but had their soul prevented from leaving their body, which were bound to their body with magic. Since they only experienced physical death for a few moments, they aren't really honest-to-goodness undead... kind of... re-alive. :^) Since Frostmorne's power bound their soul to their being they would be very susceptible to its influence... but as the connection between the soul and the body grows stronger over time they'll develop more and more of their old personality and will rely on the reanimating magic less.

I'm not saying you're wrong at all... I think lore points to your explanation... but I can't see how PC DKs could exist if they were actually liches and Frostmorne was their phylactery.

If you think about it, Arthas never died and he’s a Death Knight. I think it’s not a prequisite to have died to become one. Some DK - notably the forsaken - have died. However, once upon a time when it was only paladins who fell, they never actually said they died. They simply turned away from the light. It’s like a darthvader sort of thing - turn to the dark side. It makes me wonder if in the absence of light, the reverse is this.