It’s important that you see the gear you’re getting. You see it in the world as you’re fighting for it (or fighting the thing wearing it). Your character picks it up. Your character has to put it somewhere (even if it’s some technological Bag of Holding) and then when you use it you can see it on your character. That feels like an actual object. Items can’t be just entries in your inventory or bits of implied game mechanism anymore. We’ve graduated from AD&D. We can’t set up cutting-edge games that way. You can compare it to giving someone an interesting vocabulary list for Christmas instead of a gift. Think of the absurdity of saying, “I was going to buy you a PS4 and a remote control monster truck, but instead I printed out this list of words that’ll be really nice for you to think about.” That’s not why we play games! Back when games were just pen and paper, you had a real live person sitting there telling the story, guiding you along. When we buy a disc and it comes with a fancy word list to collect, that’s no different than having a GM handbook and no one to play with.
Now, it’s important to note items are well named and do evoke a sense of being a part of the world. They have to have that grounding. But then it is the designer’s job to take that grounding one step further. Once the player finally obtain an item, its effect needs to be seen. It has to make a difference in your game, has to change your strategy. When you get a new piece of gear, it should make your current challenges a little easier and allow you to take on a little more. Every item you obtain should do that. As an example, a new piece of armor might make an environment more survivable. Not being able to go in a hot room until you have heat resistant clothing is a way of grading exploration, but having a piece of armor or device that gives the player different moves when they’re in a certain environment, like camouflage or faster movement in a jungle environment, is a far more interesting way of integrating the player into the world. A new weapon can just be more powerful or it can set the player on a new path to victory. Initially it might cause an enemy to react differently rather than produce immediate results. Instead of being the higher number in a card game, the new weapon becomes the spearhead for a new strategy.
Everything that the player acquires should draw them deeper into the game and not just be a sticker on the wall. An item doesn’t have to actually affect gameplay to be a thrilling acquisition. In Force Unleashed, it was surprisingly satisfying to pick the costume and lightsaber crystal that looked the coolest together—and when it matched the environment, it made the next level that much more of a work of art. If functionality and game mechanics were added to that it would make it all the richer an experience. I love it when every item in a game has a purpose for further interacting with the world. It immerses the player, makes them feel integrated with the world. This integration is best described by Mihaly Csikszentmihaly in Flow:
The loss of the sense of a self separate from the world around it is sometimes accompanied by a feeling of union with the environment, whether it is a mountain, a team, or, in the case of [a] member a Japanese motorcycle gang, the “run” of hundreds of cycles roaring down the streets of Kyoto. … This feeling is not just a fancy of the imagination, but is based on a concrete experience of close interaction with some Other, an interaction that produces a rare sense of unity with these usually foreign entities. … When a person invests all her psychic energy into an interaction—whether it is with another person, a boat, a mountain, or a piece of music—she in effect becomes part of a system of action greater than what the individual self been before.
This quote captures that feeling of being in tune with a game world that can come from gear that offers visual engagement and added game mechanics. The items you acquire are the major visual and kinetic component of how your character evolves before they are ever trophies or a list of your progress through the game.