Identify
Identifying magical items is one of the primary concerns for any adventurer in Sanctuary as they try to find the type of enchantments that suit them personally.
Background
Any object imbued with magic exhibits an aura that is easily noticed. To determine the exact nature of this enchantment, however, requires intense study and an extensive knowledge of arcane materials and symbols.
It's extremely difficult to master the ability to memorize a spell of this magnitude but the Vizjerei mage clan have developed a means for the untrained to discover the secrets of an ensorcelled object by using a rare crystal that is extremely sensitive to magical auras.
This sensitivity makes it very fragile, however and the crystal will shatter if it is brought too close to an enchanted item. The very act of Identifying such an object also destroys the crystal. Scrolls and staves have been crafted and imbued with the spell that identify virtually any magical aura. By using special inks and dyes that contain tiny grains of these crystals, the stability of the crystal is maintained until it is used to examine the enchanted object.
Gameplay Tool
Identifyable items have been around since early days of pen and paper RPGs (and, ironically, there's a Diablo pen and paper RPG), where a player found loot they had to spend some resources to identify in order to make use of them. It created a level of realism that magical items found are mysterious. One of the good reasons to identify rather than just start using was the fact that weapons and items were not always benevolent, but could be cursed.
Diablo
Diablo I had this implemented in the shape that the player needed to buy Identify Scrolls in order to get treasure identified and Diablo II had just the same system.
Diablo III, however, will likely not have this system, as the D3 team it primarily takes away the fundamental gameplay of the game and simply "isn't fun".
As revealed in the official Caravan Preview [1] Identify Scrolls will also be a part of Diablo III.