Reference: Loot (Folder Index)
Purpose
Contains all files used for static drops. Static items are defined in the ItemDef files. They include armor sets, weapons, crafting materials, etc.
Files
Creatures.txt - Defines drops from specific creatures.
Packages.txt - Defines groups of sets, and the creature levels they drop from.
Sets.txt - Defines sets, which are collections of one or more items and are required for the Packages and Creatures file.