AWESOME AVATAR PIC!
For items -
Items are all statically defined, anything that is equipable doesn't take damage or wear or anything like that. (TLD2 will most likely have randomized item properties). In this way it's a little bit closer to a Final Fantasy approach I guess, but the way to define what an item can do are much more complex.
I have an expression language that defines things like damage done. So for Grognar's Crude Axe that is currently
[1d6 + 2] # 0.05 per {strength - 5 | max=20}
Which translates to: "A 1d6 dice roll + 2, all increased by 5% per strength (-5 meaning 5 of those strength don't get the bonus), up do a max of 20 (basically double damage).
Example:
Roll a 6 so the base damage is 8
Grognar's strength happens to be 10, subtract 5 that 25% of bonus damage
Damage sent to the opponent is 10.
Damage has an element also. The physical element is common and what Grognar's axe does - but each item can have a list of those expressions with different elements, fire, poison, etc.
Defense against these things is broken up by element - One design decision I made was that Armor and Element Resistances aren't different concepts - You simply have a resistance to the Physical Element.
Weapons can also have effects that proc, those are varied and include things like - does poison damage over time, Weakens, Slows...
The basic design philosophy is that items should interact in interesting ways and that there isn't just one way to go through the game.
Consumable items are treated differently - they can only be stored in limited quantities on hand to make grinding through a dungeon more challenging. So far I don't have many consumables developed but there are heal potions and mana potions.
Check out this Blog Post:
goo.gl/mp6iLh - It outlines how the "icon" representation of items works.