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Items in Elder Tale range from potions to equipment to ingredients, and are obtained from shops, monsters, quests, or raids.
There are various item ranks in the game, which determines its abilities, rarity, and stats. Rarer items may be subjected to a "lock system," which binds an item to a player and makes it impossible for other players to use it.
A way of showing the strength of an item, which applies to weapons, armors and crafting materials.
Normal items (通常品, Tsūjō-hin?) are commonly sold in shops. They have the relatively lowest stats for their levels and have no magical effects. That said, they're the cheapest option for Adventurers who use consumable items, such as arrows.
Magic-class (魔法級, Mahō-kyū?) items are, in many cases, Normal-class items with a special prefix and/or suffix attached to it. For example, a "Fire Longsword" is the Normal-class item "Longsword" with fire-elemental properties. These items can have up to 2 abilities on them.
It is possible to purchase these from People of the Earth who deal in magical goods, and they have a high chance of dropping from dungeon treasure chests as well. Around 10 of them can be obtained every adventure, so in a party of 6, each member can get around one or two Magic-class items. Although Adventurers do not really consider these rare, they bring it back with them to sell for Gold. After the Catastrophe, these items are produced in increasingly large quantities.
Production-class (製作級, Seisaku-kyū?) items are, as the name indicates, crafted by Adventurers using different materials. Items of this rank can hold 3–5 abilities if a high-quality Normal item was used as a base, giving them a wider range of possible abilities than a Magic-class item.
Although their stats and ability modifiers are lower than you'd see on Secret-class items, the abilities you get on an Secret-class item are highly randomized, making it difficult to get what you want. As a result, many Adventurers use Production-class items made to their specifications instead.
Items crafted by high-level players are considered luxury goods. After the Catastrophe, they have been researching into usage of different magical materials and creation processes.
The powerful Secret-class (秘宝級 or 秘法級, Hihō-kyū?, also translated as Artifact-class) items are obtained through dungeons, monster drops, or quests. Naturally, joining a party is required to obtain these items. It takes about two weeks in a dungeon to get a Secret-class equipment drop, and it's rare if nobody in a party gets one during this time. Hardcore gamers typically get several as they make their way to level 90, and most Adventurers have one or two Secret-class items by that time.
For the most part, getting Secret-class items isn't difficult: the real time-consuming part is getting one that fits your needs. For example, getting a "Secret-class Longbow" is about 20x harder than getting "any Secret-class item." A Secret-class item that matches the owner's needs is said to be a very valuable and reliable partner.
Secret-class items have a high chance of having the lock system, so once an owner is decided, it gets bound to the player and nobody else can use it anymore. Unbound Secret-class items are sometimes referred to as "clean items" and can be found being traded on the auction system, but they are typically very expensive.
Fantasy-class (幻想級, Gensō-kyū?, also translated as Phantasmal) items were the rarest grade of items in the game era. Only a limited amount of these items exist per server; each expansion pack usually adds around 500 Fantasy-class items per server. Along with having top-grade stats and abilities, Fantasy-class items sometimes have other perks like being able to talk or having an AI.
Fantasy-class equipment can only be acquired through raids, or forged from phantasmal material obtained through raids. The item is locked onto the player and cannot be traded. As of such, acquiring such an item requires at least 24 people, the minimum number needed to complete a Rank 1 Raid, and a lot of training and patience. Before the Catastrophe, a person who acquired a Phantasmal item would have his or her username broadcasted across the entire server, making it impossible to conceal that fact.
Although Fantasy-class items with lock to the player, they can be carried around without being bound, so it likely locks once it is equipped. In Log Horizon: West Wind Brigade, Isami briefly uses Soujiro Seta's Fantasy-class katana during a battle, but there is no precedence in the main series for this to be able to occur.
Types of Items
Equipment is worn by Adventurers and People of the Earth in order to boost their stats. Some monsters and Raid Bosses are also capable of donning equipment. Equipment can be dropped by monsters, with varying ranks.
Most equipment can be recolored and have a guild logo added onto it. D.D.D and the Black Sword Knights are particularly notable for having running themes in their equips, with the Black Sword Knights choosing their cape color and design by popular vote.
Potions and Food Items
Potions can be used to replenish HP, MP, or cure status effects. Certain food items produced in the crafting menu by Chefs can also grant temporary buffs to the consumer.
Like gold, items can be dropped by defeating monsters. Items will not automatically enter one's inventory, so it must be looted from monster corpses.
In dungeons and raids, the loot will appear in a pile, even Phantasmal-grade ones. Different guilds have their system of distributing such equipment, whether it is given by the Guild Master to the most suitable member, decide by vote, or cast a lottery.
Interesting to note is that loot can be collected by one person to be distributed later, so it is likely that collection overrides the binding effect that some equipment have.
- Right Hand
- Left Hand
- Bag Slot
- Source 
- JP wiki: https://w.atwiki.jp/loghorizon/pages/39.html
- Log Horizon light novel: Volume 7, Chapter 5
- Log Horizon: West Wind Brigade manga: Chapter 14
- Log Horizon manga: Chapter 2