GB Feature: Kingdoms of Amalur: Reckoning Interview
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How have you arranged the difficulty of monsters and the significance of loot? Are monsters scaled to ensure that they always pose a challenge, or can we find ourselves in an area where the monsters are significantly higher level and very lethal? Building upon that, is the loot we find scaled to our level in any capacity and is it statically or randomly placed in chests and other containers?
The difficulty/quality of enemies and loot are both scaled with the same system, a method we call (Space Leveling.) The way this works is that each area in the game (whether that be a dungeon, the inside of a tavern, or a swamp) has a particular level range determined by the designer. When the player enters that area for the first time, the game checks the player's current level and sets the area to be as close to that level as possible within its range. For instance, if I'm level 3 and I go to the village of Didenhil and its level range is 5-10, the level there will be set to 5 for the rest of eternity. Meanwhile if I went there for the first time as a level 20 character, it would all be set to level 10.
This approach ensures that the game can scale enough to accommodate a wide array of different approaches (completionists, players who focus exclusively on the main quest, etc.) while still giving a clear sense of progression. If you return to Allestar Glade (the starting area) after you've leveled up a bit, you'll find that you cut through previously-challenging enemies like a hot knife through butter. Similarly, if you try to rush ahead to eastern Erathell at the very start of the game, you're very likely going to get your butt handed to you and need to come back later when you've leveled up a bit.
As for loot, it's mostly using a (slot machine) random drop system based on the Space Level as I described above, so enemy difficulty and the quality of the loot you can potentially get from that enemy are tied together. There are various cases where specific loot is hand-placed, though. It just depends on what's appropriate for the story and the region.