Items and equipment are additional methods of becoming stronger in Nioh 2. The better equipment you have, the more passives you have on your character and the more damage you can do to your enemies in combat. Some items are noticeably better than others, especially given the quality and type of items they are.
The rarity of an item varies base on the color of its name in your inventory. The white colored items are the standard ones you will encounter frequently. Light blue are uncommon items. Purple are rare items. Yellow-named items are legendary, and these are some of the best items you can find during your journey. You want to use and equip as many yellow items as you can find because these will have the stats available to you, and they usually have a passive attached to them. These passives usually have a stat requirement you must meet before it activates.
You can earn better items by fighting revenants, which are recently deceased players, or by taking on bosses you encounter in the game. You will encounter bosses during your journey in the game, and they are less frequent than fighting revenants. The revenant graves are found nearly everywhere in the game, making them a great way to farm items when you need to obtain new equipment or want to sell them to Kodama at a shrine for divine rice.
For those looking to acquire better equipment, spend time fighting revenants and engaging them in combat. You have a chance to receive a variety of items, but the more difficult gravesites will have the best items available for you.