If it didn't reset at all, all the 'lootables' would be looted. Monsters are random spawn (you can go down a hall, have an encounter, then go back the way you came and have another).
When you've completed a level (e.g., Floor 1), you can click on the waypoint in the form of a painting in the starting room to go to the beginning of your the current level (e.g., Floor 2).
And... to those who haven't played it, it's free to play, and the graphics (Unreal engine) are absolutely stunning!
[YT]http://www.youtube.com/watch?feature=player_embedded&v=HK6jn1H2in0[/YT]
[Edit] Note to those who the Ultimate Rotation Control app: After downloading the app, on launching it, it will 'unpack' the files - a process that takes about 3 minutes. Make sure you go to URC's per-app settings and force it to Landscape mode, or it will go through the whole unpacking process unsuccessfully and then shut down (and leave it forced Landscape, or it won't successfully run even after installation is complete).