The rarity of a piece of equipment determines or heavily influences its stats, durability, and level requirement. The higher the rarity, the harder it is to obtain, and the stronger it is compared to other rarities below it. The kind of rarity is determined by the color.
Red - "Legendary" Equipment.The highest rarity which often is associated with the best equipment in game.
Orange/Yellow - "Epic" Equipment. Sometimes as rare as Red equipment. Orange equipment is also very sought out for.
Blue - "Rare" Equipment. The middle of the line equipment. These are hard to obtain but can not compare to the Orange and Red rarities. These can be worse than white or grey equipment sometimes
White - "Common" Equipment. Drops for this kind of equipment is high and can be crafted easily.
Grey - "Weak" Equipment. Slightly worse than white equipment but at similar drop rates