So it affects the drop rate of the items in particular. A lot of the gold/blue items already have a low drop rate. Say a armour piece from whatever dungeon or mob has a theoretical drop rate of 0.0001, when you use a 100% amulet it changes to 0.01 and a 200% would be 0.02. This also applies to all the other items they can drop in the pool of available drops. From memory Niiv made a post a while back about the way they work so could be worth having a look over the forums