Area of Effect is a general term for effects, skills, spells or abilities that will affect an area, and the inhabitants of that area, rather than a single target. Also known as Splash Damage or Line Damage. Most attacks in Diablo III will affect more than one target, or at least multiple targets with the use of Skill Runes.
The area that is affected can vary greatly, from a few monsters close to a Barbarian's skill: Cleave, or a dozen monsters being crushed under a destructible wall.
The effects can also vary, as an AoE damage does not necessarily need to cause damage. It can be an AoE buff or debuff cast on friends or foes.
AoE Shapes
AoE effects can be of any shape or size, depending on the source. Many effects have circular AoE, but this is not a given rule. Some are also "Line Damage", and do damage in a square/elliptic shape with a width. It can be a crescent shape, and even square in some cases.
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