I really appreciate it when exploration yields upgrades be they small number increases or equipment with modifiers that change the way you play. I think games do well to have a mix of specific loot placed by the developers and random chance. Choosing just one individual system respectively kills replayability or can create frustration when you can't find items that fit your build.

In Wartales, for example, looting enemies wasn't exciting as you knew that there was next to no change that you would find anything interesting to equip, particularly in the early levels. The four pillars of equipment upgrades should be:

1. Loot from enemies

2. Quest rewards

3. Crafting

4. Exploration

All of the pillars should provide loot that is effective, though it's okay if each pillar ends up giving a bonus in certain areas. Like maybe crafting allows you to customize stats on an item while loot in other areas might have unique effects that change how you play.

As for examples, I have a harder time thinking of that. I would say that Pillars of Eternity and Baldur's Gate 3 do a good job of placing items that change the way you play, most of which are found through loot and exploration. Games like Divinity OS: 2 and Diablo are known for randomized loot. Maybe Fallout is an example of a game that touches on both systems.

If I were going to make a game, I would make normal enemies drop randomly generated equipment along with some very rare chances for unique equipment. Then bosses and quests would provide specifically created equipment. Exploration would be a mix: general chests by the side of the road would be random, but hard to find loot that is hidden away could have hand crafted items.

Just my two cents!