To me great itemization enhances the chardev system. But even games with little to no chardev, like the IE games, can have great itemization.
In my opinion what constitutes good itemization is getting upgrades you are excited about, not just by drops, but with store purchases. You have goals and planned upgrades to use your gold on. You get excited when you find a new merchant with some great shit.
Also, if you look at D&D games (from AD&D to new editions), you start with a lot of equipment slots and go half or 3/4ths of the game before finding something worth putting in a slot. But base equipment has been thought out as well. There is a non-linear and not overly or completely formulaic set of basic weapons and armor. In 3.5 on the basic armor and weapon itemization of D&D is superb and ties extremely well into classes and feats and functionality. It certainly enhances character building significantly in tons of ways. And you can get great upgrades no one can use.
Also, look at Underrail and the belt slot. It did a lot of different shit and changed functionality. I think the itemization of Underrail was done exceptionally well, while also being kind of shitty by how OP crafting is. You miss out on a lot of functionality and aspects of the itemization system if you ignore crafting, which I don't think is very good design if you do not have separate crafting system and not pulling from regular chardev resources.
Now, I think a bad system is when item upgrades are constant, minor, and abundant. Take any popular console rpg. You are probably getting tons of upgrades all the time, but they aren't very major. Think of WoW. Constant minor upgrades. Trinkets used to be neat in vanilla, but are now just stat boosters. Set pieces usually are impactful and change or enhance some functionality. These types of systems are complete shit for non-mmos.
From Jade Empire to Skyrim, I think the console rpg has tailored their itemization to little kid's minds. The like getting new things to equip all the time, so give it to them, they like crafting, make crafting necessary, the like looting something every two feet, making lots of loot. Its shitty, and itemization ties in to the loot system, economy, resource usage, etc.
Also, I think most random loot games have bad itemization. Most people love the itemization that Diablo 2 (I think) made loved. I dislike randomly generated anything. I want the areas and loot placement to be hand crafted and done on purpose with all the other game's systems in mind including chardev, economy, etc.