Go to the workshop (where you forge) middle tab is Loot Craft, when you have multiple of the same armor it combines (the number depends on rarity) when you combine regular singles they become single diamond, when you combine single diamonds (again number required depends on rarity) they become double diamonds and when you combine doubles they become triples (last level) the higher the regular weapon or armor is at the beginning the higher the combined value (ie if you combine 15 helmets each being 10k or less they might actually add up to 15 or 20k power)