From Diablo Wiki
"Loot 2.0" refers to a major revision of the items and drop system in Diablo 3. The term originated inside the Diablo 3 development team and spread to use in the community.
There is no ETA on Loot 2.0 but many elements of it will be patched into Diablo 3 Classic sometime prior to the launch of the expansion pack. The fullest expression of Loot 2.0 will appear in Reaper of Souls, which is targeted for release sometime in 2014.
Loot Runs are randomized dungeons, monsters, and a mini-boss that drops sweet loot. Also, they’ll be pre-patched for free.
 Loot 2.0 Planned Features
The term "Loot 2.0" is used fairly broadly, to refer to a suite of changes, improvements, and rebalances to the entire items system in Diablo 3. These changes affect items and what players do to obtain gear in the first place. The feature set continues in development, but some of the named features include:
- New game modes including Loot Runs with guaranteed special item drops when successfully completed.
- Smart drops where a dropped item is guaranteed to roll the appropriate mainstat for the class that finds it.
- Fewer but better item drops, where players will see far fewer items, but the items (especially the rares) will have better stats.
- A new NPC Artisan, the Mystic who has the abiilty to reroll one selected affix on an item.
- Legendary (including Set Items) will get an across the board quality buff.
- Legendary items will drop more often, especially for lower level characters with guaranteed legendary drops from the first kill of many story/quest bosses.
- Legendary items will roll with less low-end variability, to reduce the likelihood that they are complete junk.
- Legendary items will gain variable item levels with stats scaling appropriately -- current high level items legendaries will drop on lower difficulties and low level Legendaries will drop in the end game. All stats on these items will scale up or down to be appropriate for the level of the monster that drops them.
Item binding is going to be a key feature of Loot 2.0, with some of the found items, and most or all of the crafted items or items upgraded with the Mystic gaining BoA or BoE to restrict them from being traded or sold. Full details are not yet finalized.
 What is Loot 2.0?
Josh Mosqueira explained how the development team uses the term in an interview with Diablo.IncGamers in July 2013.
...I think it’s just the reaffirmation of our evolved philosophy behind items. The way our items ideas evolved from launch until now, for the team to have a simple rallying cry around it. At the heart of it is the fact that Loot is a fundamental part of the game. Every time you’re clicking the mouse, you’re killing something because you want something awesome to drop. And we just really want to be sure that we’re keeping in mind that core fantasy. And that when items drop, players feel that there’s a utility to them and an intrinsic gameplay value to them.So I guess Loot 2.0 is a simpler way for us to say that we want to keep evolving the itemization philosophy and making sure that it’s focused on players and that players feel they’re getting cool stuff.
Community Manager Vaneras commented on the general philosophy in August 2013.
As in the previous Diablo games, gear upgrades will become less frequent over time as your character progress and acquires better and better gear. At some point around the time when your character is all maxed out and fully equipped with great legendaries, you will be more likely to find a good sidegrade than a good upgrade, but thanks to loot 2.0 as well as the Mystic, you will have some more interesting options to adjust and improve your gear.
 Diablo 3 Console Testing Loot 2.0?
The Diablo 3 Console was released in September 2013, and while it launched at v1.08, it had many tweaks and special modifications for the console. These included many changes to items and drop rates, especially the fewer-but-better rebalanced to Rare item drop rates/quality, and Legendary items that can drop all throughout the game, with their stats scaling up or down depending on the monster that drops them. While the overall Console experience is not Loot 2.0, some of the changes are features that will come to the PC version in Loot 2.0.
Prior to the console's release, Diablo.IncGamers.com asked the developers if the console was a test run for Loot 2.0 and received an informative answer:
So we had that advantage. We also did extensive testing on two fronts. We have what’s called our User Experience Group. Which is a sub-team within the QA department. They’re all expert players and they were playing the console for weeks specifically looking at this issue. To see if we’re running into any brick walls, if we’re dropping the right things.. they helped to identify a number of things that we had time to address and look at.
We also had our internal Strike Team, these are just other senior designers and devs across Blizzard and I think at the beginning they were really focused on the core initial experience, but the last copule of months their whole focus was on the end game and making sure that once players got to level 60 and beyond they had the right balance of items and such. In addition to that, I think there are a few mechanic things… making sure the recipes and item sales were beefed up for both the vendors and the blacksmiths. If you’re not finding it you’re going to be able to make it or buy it.
The last few months this was a big issue in testing for Jason Bender, and myself, and Matthew Berger. We wanted to make sure we didn’t run into the same problems. The philosophy is that players are going to get fewer items, so we have to make sure they’re the right items.
Flux: But you were probably curious about how it would work without an Auction House, right? Everything you just said about testing the economy in a close system vs. an open system.Josh Mosqueira: Yeah, for sure. We first started having those conversations from a technical standpoint, but we eventually saw the interesting by-product of it, was that it created a closed ecosystem so we could see how the economy would sort of evolve and mature without the influence of the Auction House.