I've seen several different monsters restoring their health while playing today. It seems to be when I leave them alone and they are not visible to me, like if I leave a DoT spell on them and wait for the damage to kick in. I go back and they are on full health again. Damage was definitely done when the spell was cast. It's generally when I cast the Egyptian Magic Sandstorm that I've seen it happen, on monster types such as Deth, Mummy, Scarecrow and Ectoplasmic Excession.
I've seen some boss-like monsters regenerating, and I didn't use any magic against them, so I suppose it's some specific monster ability.
I've seen this happen with most regular monsters, but the ones that always stick in memory are the unfriendly AIs on level 1 - I hurt them about 50%, then run away due to low health, but by the time I'm ready to resume fighting they've healed all the damage while chasing me - usually at 1hp/turn, as though constantly nomming deep omelettes.
