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The holder recovers 1/16 (6.25%) of their maximum HP at the end of each turn, rounded down. This healing occurs after damage from sandstorm or hail, but before damage from poison, burn, Nightmare, or Leech Seed.
Leftovers is the standard against which passive healing and damage is judged. The healing amounts to 1/4 of the HP cost of Substitute—a fact readily abused by savvy battlers. Leftovers is most often found on Pokémon that are trained for bulk. Generally, if a Pokemon is 2HKOed more often than not, it is unsuitable for Leftovers.
Leftovers most often finds itself in the hands of Substitute users, walls, tanks, and Pokemon of the defensive mold. Often, a form of passive damage (typically Toxic or Will-O-Wisp) finds its way onto the movesets of such Pokemon, along with Protect to gain a "free" turn of Leftovers recovery and passive damage. Just as often, though, users of Leftovers use the healing to aid in taking blows while they set up boosts, or attempt to break down foes with repeated unboosted attacks. If your Pokemon draws fights out longer, whether through Protect and Substitute or by virtue of its defensive stats, consider Leftovers for its held item.
Note that for all of its virtues, Leftovers is sorely outclassed in very fast-paced metagames, such as VGC, the Battle Subway, or Little Cup. Each of these environments has their own preference over Leftovers. In VGC, the Multi Battle Train, and the Double Battle Train in particular, it's best to eschew healing items over survivability items such as Focus Sash or a type-resistance berry. Even the Single Battle train prefers Sitrus Berry, as Pokemon rarely live much longer than four turns. Little Cup prefers Oran Berry; with such low HP counts, Leftovers will only heal 1 HP per turn and will take 10 turns to achieve the same recovery as an Oran Berry. Leftovers is best used in single or rotation battles that allow a full team of six Pokémon; any less and the stress on the remaining Pokémon to survive all threats calls for faster measures.
Village Bridge, inside a hidden trash can underneath the Bridge itself.
You can obtain a Munchlax that holds this item by trading for it in Undella Town during the summer.
Pickup, Lv. 81-100 (1%).