First, you must be level 30. Then you can access the Enhancement window by clicking the anvil in the top left of your screen.
Now, hold your mouse cursor over a piece of equipment and press the Ctrl key to show the detailed stats. Okay, let's do a quick run down of some terms and the information we have here.
Red outline - Enhancement: The default stats that every item randomly has generated upon dropping. The value of the stat is random within a certain range determined by the level of the item. The Enhancement stats are not affected by the "Rune Extraction" or "Rune Combination" processes.
Green outline - Rune sockets: Indicators to signify how many rune sockets are used and how many are open. Currently, 2 of the orbs are lit up to signify that we have used 2 of 6.
Blue outline - Rune effects: The stats that equipment randomly generates that are not part of the base Enhancement. The effects and their level is randomly generated, though the value for any given effect at a certain level is set. There are three parts to a Rune effect. The name of the effect, the level of the effect, and the stats it provides. In the example we have the "Hit", and "Clear" Rune effects. "Hit" is level 27, and "Clear" is level 28. The effect from each being Hit Points +34.2, and Stun Recovery +36.5 respectively. The Rune effects are not affected by the "Enhancement" or "Modify Enhancement" processes.
Next is a Melting Stone. These are required to create Runestones. As it stands now, they only have a single random Rune effect on them and it's always level one.(This needs to be changed.)
Runes and Rune Effects
Going through the Enhancement window to the "Rune Extraction" tab we have the process of creating Runestones which will be used to customize our equipment. After placing a piece of equipment and a Melting Stone into their respective slots you can preview the result. Once again hold Ctrl to see the detailed stats. Here we can see the "BasisPenetrate and Puncture" from the Melting Stone, as well as the "Hit", and "Clear" from the equipment. Note that the equipment and Melting Stone will be destroyed in this process.
Now to the "Rune Combination" tab. This is where the magic happens. I've taken the Runestone we just created along with two others I had prepared previously. Similar to the "Rune Extraction" process, after we place three Runestones as well the equipment we want to modify into their respective slots, we get a preview again. Holding down the Ctrl key again we can see the detailed stats. I've outlined the stats from the Metling Stones in yellow, and the Equipment in blue.
Looking at the result we can see that the Rune effects we end up with will be BasisParry lv1, BasisPenetration and Puncture 1, Life 26, Shock 26, Hit 27, and Crit 28. Despite all of the level 28 Rune effects we had, we ended up with the level 1, 1, 26, 26, 27, and 28. This is because when there are more than 6 runes, the superior ones are removed. This is simple when the Rune effects are all different levels. However, if they are all level 28, then the only way we know which ones will take precedence over the others is if someone(Not me) tries out every possible Rune effect and compiles a list.
Note that you can't have two Rune effects of the same name.
Enhancing and Enhancement
The process of enhancing an item is simple. You place the required material in it's respective slot, along with the equipment you wish to enhance. The materials can be acquired by disassembling equipment using the button at the bottom of your inventory. Weapons require Whetstones, Armor requires Hard Leather, and Accessories(or Ornaments as the game calls them) require Powder. Disassembling weapons gives Whetstones, Armor gives Hard Leather, and Accessories give Powder.
Once again, the game gives you a preview of the result. Successful Enhancement will increase the base stats of the equipment as well as the Enhancement stat. I've outlined the base stats in green, and the Enhancement stats in blue. Through Enhancement light armor gains armor and damage, heavy armor gains armor, weapons gain damage, and in the special case of hammers, armor as well. There are three outcomes when attempting to enhance an item. Enhance successful +1, enhance failure, and enhance failure -1. You can see the Enhancement level of the item in the name. I've outlined it in yellow. It can be +1, +2, +3, and so on, up to +12 with our current materials.
Modify Enhancement is the last and simplest tab we are going to go over in this guide. Those of you that play D3 will find this familiar.
In the case of the gloves in the previous image, they only had one Enhancement stat, Critical Hit Damage. However, items can have up to three Enhancements. I've only seen up to two myself, but based on the UI, there's room for one more.
After placing the equipment you wish to modify into the slot, you will be shown the Enhancement stats that are on the equipment, as well as a list of other possible Enhancements. Select the Enhancement you wish to modify and it will be re-rolled randomly into one of the Enhancements in the list with a value in the respective range. The trick to this is that you can only modify one Enhancement per piece of equipment, however you can modify that Enhancement as many times as you can afford.(It gets expensive fast) The other Enhancements on the item will be greyed out and locked from being modified. Modifying has no effect on Rune Combination or Extraction.