Every piece of equipment has an Item Power (IP). You can find it in the bottom right of the item's tooltip, next to its rarity, for example Relic (48 IP). The higher an item's IP, the stronger it is.
Two copies of the same item can have different IP. An item's affix and quality both change it.
Red Affix: -4 IP
Orange Affix: -2 IP
Green Affix: +2 IP
Blue Affix: +4 IP
Pink Affix: +6 IP
HATED Affix: +8 IP
Event Affix: +10 IP
Quality: +2 IP for +, +4 IP for ++
Affixes: The same affix gives a bigger boost on a low IP item than on a high IP item. See Affixes.
Traits: Armor and rings get a trait at 15 IP, and another every 10 IP after that. See Traits.
Rerolling: Rerolling a higher IP item costs more silver. See Rerolling.
Comparing: When you hover an item, its IP turns green if it's better than what you're wearing, and red if it's worse.