How does Diablo II's difficulty scaling work?

Solution 1:

Being a fairly avid D2 player, I can tell you that it works in roughly the same way. Just like in D3, as you go up in difficulties, creatures become much stronger. In D2, many of them gain immunity to specific elements, and the likelihood that you would encounter a unique (yellow/gold monsters) or pack of champions (blue monsters) is increased. Additionally, uniques and champions have more modifiers when you encounter them (similar to in D3).

In much the same way, the Acts also scale in difficulty. In fact, Blizzard did a very good job of making Act 5 harder than Act 4 of the same difficulty, but not so much that it was much harder than Act 1 of the next. A lot of this comes from the fact that as you increase in difficulty levels, a lot of your stats are reduced. For example, in Nightmare, all players suffer a -50% reduction to all resistances. Additionally, life steal effects are cut to a quarter. When you go to Hell, the player starts with -100% resistance (yes, it was completely possible to have all negative resistances, which would, as you'd expect, amplify damage taken from that source), and life steal effects were cut to 1/8.

Another big spike in the difficulty was also mentioned above: the more common appearance of uniques and champions. In Normal, it is unlikely that you will find more than 1 or 2 packs of uniques or champions in any given area (for example, the stony field), excluding super uniques which always appear in the area (like Rakinishu, Blood Raven, Bishibosh, etc). However, in Nightmare, it is not unlikely that you will simply encounter 2 packs of uniques/champions at once. Then you might have to deal with something like "Cold enchanted, extra fast" at the same time as dealing with "Lightning enchanted, multiple shot". That, along with natural monster immunities (for example, the entire Fallen tribe becomes completely immune to fire damage in Hell mode) makes Hell mode much more challenging than even Act 5 of Nightmare.

Solution 2:

This is an expansion of AndyPerfect's answer.

I've exported monster level (mlvl) data from patch 1.13 _{(but the latest patch, 1.14, brings no changes to monster data, so this answer is still valid)}.

It seems that progress is almost nearly linear: Normal Nightmare Hell Act 1 - mean 7 39 75 Act 2 - mean 15 46 79 Act 3 - mean 23 52 82 Act 4 - mean 27 57 84 Act 5 - mean* 33 63 83 *including Cow Level, as player has to kill Baal to enter it

What is worth noting, Act V Hell has average monster level lower than Act IV. Act IV has only 5 areas and average mlvl has been increased by River of Flame and CS. Act V has 28 areas (including Ubers and Cow Level, which is after Act V progress-wise), so there's no such bias.

As a picture is worth thousand words, I've prepared charts with monster level per area: per difficulty level and summarising one. Areas have been arranged by in-game progress (i.e. in order in which player can visit them).

As you can see, progress is almost linear. However, there are some discontinuities:

• Normal Act V "hell" areas (Abaddon, Pit of Acheron, Infernal Pit) have significantly higher mlvl than areas with portals to them (respectively 39 vs 25/26/27)
• Normal Nihlathak's Temple and subsequent areas, accessible after freeing Anya, mlvl-wise fit between Ancients' Way and Worldstone Keep
• Normal Cow Level, accessible after completing Act V, has mlvl significantly lower that Act V (28 vs 43)
• Nightmare Act I has slightly lower mlvl than Normal Act V (36 vs 43)
• Some areas in Hell Act V (Mausoleum, Pit, Maggot Lair 3, Ancient Tunnels, Forgotten Temple, Ruined Fane, Disused Reliquary, River of Flame, Chaos Sanctuary and Worldstone Keep) have mlvl 85, higher than surrounding areas. This is intentional. In these areas, player can find much better drops.
• Uber areas (Matron's Den, Forgotten Sands, Furnace of Pain and Uber Tristram) have lower (!) mlvl than Worldstone Keep. Hovewer, Uber bosses have mlvl 110, the highest in the game.

If anyone need data from this post for further theorycrafting, it's available here.