Rarity is a measure of any given how hard it is to find it, as well as how good it is. There are 6 different rarities: Common, Rare, Epic, Legendary, Mythic, and Glitched: Common is the lowest and Mythic the highest. Glitched are Creative Save/Console given only.
Through forging, you can turn items into other items by combining them. The resulting items are either the same rarity or a higher rarity.