What does rarity of items found actually affect?

Is it only common, magic, rare, and unique drop rates?

It affects the chance for any tier of item to be converted to a higher tier.

Due to the way the tier system works in PoE 2, this not only means the chance for an item to increase in rarity, it can also increase the quality of the mods on the item. (Items boosted this way will have (Tier X) listed after their base name when unidentified. Higher is better, and 5 is the best tier.)

Lastly, it also affects currency drops, giving a better chance to get higher rarity currencies.

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ThrasherGX#5514 wrote:

It affects the chance for any tier of item to be converted to a higher tier.

Due to the way the tier system works in PoE 2, this not only means the chance for an item to increase in rarity, it can also increase the quality of the mods on the item. (Items boosted this way will have (Tier X) listed after their base name when unidentified. Higher is better, and 5 is the best tier.)

Lastly, it also affects currency drops, giving a better chance to get higher rarity currencies.

What seriously? I have always been convincecd it only affects item rarity, i.e just higher chance for rares/uniques etc. I never thought it would affect modifier tiers or atleast not currency. If this is true its an absolute must have on all pieces?

I understand the confusion, as that is exactly how rarity worked in PoE 1.

But they completely overhauled the way rarity works in PoE 2, and yeah, its extremely strong now. If you can fit it on your gear without losing too much power, it is pretty damn nice to have.

Edit: Note that the improved mod quality tiers appear to be endgame only, or at least you must be near the end of the campaign. During leveling, rarity will mostly serve to increase the number of rares and better currencies you see, though that is quite useful in itself.

How do you know though? i cant find any info on that.