Sorry, couldn't find an explanation anywhere here... What exactly is "item quality"? Is that the bar represented by a number of stars under an item? What does it mean? Does the number of stars confer anything, mechanics wise, or is it just an indicator to let you know that one item is probably worth more/more powerful than another item at a glance? Also, is "Artifact quality" a separate thing?
Here's what I think they mean: As near as I can tell the stars under an item are the "level" of the item (as defined in the itemDB.xml), and are part of how the game generates which treasures go on which levels of the dungeon. It's not a 1-to-1 correspondence, or at least there's some sort of randomization that lets you find items from time to time that are significantly above or below your level. (Not sure if that's the "item quality" you were referring to or not, what was the context? Was it a wiki reference or something in-game?) Artifact Quality is a different animal altogether. Only artifacts have such a stat, though honestly I have no clue why the game defines some items as artifacts and not others. Artifact quality appears to affect how big a bonus the item can get from an Anvil of Krong. Some artifacts (mossy shield, for example) don't have artifact quality ratings (or they do have a rating but the rating is zero. I'm not sure, basing this off the wiki and anecdotes, I haven't looked too thoroughly at this part of the files), and those items seem to get no benefits when placed on an anvil, though they can still be cursed.
OK I think that helps... I'm very new so I'm just talking about the visible stars under the item name. I surmised that must be the item quality because I read some lines mentioning 'item quality,' possibly on the wiki or forum and assumed it must be referring to the stars. It was just weird that they didn't seem to get explained at all in game or on the wiki, yet every single item has them. But I gather that once you have an item, the stars don't matter at all? So if I'm trying to decide which sword to equip, one with 2 stars, and one with 4, I'll more or less ignore the stars. So is Artifact quality something displayed in-game like those yellow stars or is that a hidden value you have to check the game files for?
There's one easy way to find out if an item is an artifact or not. In its description it will say "it is encrusted with so and so" or something to that effect. And bergstrom was pretty much spot on for the star quality.