Torchlight 2 has cemented itself as better than Diablo 3 in my books, and now that I've had a couple of weeks to play it, I think I can start to narrow down why. At first it was just a feeling, but now I'm noticing the actual mechanical differences.
The first difference, I'd say, would be the difficulty, and more importantly, the way it's handled. In D3 you had to play up starting from normal difficulty, through harder difficulties, using the same character. I guess I understand why they did that, but Torchlight 2 separates difficulty and character level, the way I think it should be.
Inferno difficulty in Diablo 3 (at least when I played it) was often ridiculously, stupidly hard. You were constantly hitting brick walls caused by gear deficiency, and the only option was to farm for hours for incremental upgrades to slowly move ahead. I know they've made a lot of tweaks to D3 since I stopped playing, but at the time the feeling of a "challenge" wore off pretty quickly, and was replaced by the feeling of "work."
I've got two characters I'm working on in TL2, an Outlander and an Engineer, each with different friends I play with. Both are being played on 'Elite', the highest available difficulty. So right from level 1 there's a challenge. I don't have to spend thirty levels breezing through the game on normal in order to unlock a harder difficulty.
There are times that Elite mode is hard... you die a lot, especially on some boss fights, or when you get swarmed by archers, or whatever. But it never starts to feel like a chore, and that's due to a couple of fundamental design choices. First of all, there are no repair costs. You're not going to go broke and be rendered completely useless just because you hit a tough section of the game.
Second, the enemies don't immediately regenerate all of their health as soon as you disengage them. So even if you're having trouble with an area/boss, and dying a lot, you never stop feeling like you're making progress. If you get an enemy down to half health, and you die, he's still at half health when you get back there, and you can keep working on it. With enough time and patience, you can get through all of the hardest areas of the game. You'll never just hit a dead stop at a brick wall.
I crave challenge in my video games, it's why I always start at the highest difficulty available. However it's no fun to have a game just completely stop you in your tracks. Torchlight 2 realizes that hey, perhaps you haven't been super lucky with loot drops and you haven't gotten a new weapon in a few levels... that's okay. You can still brute force your way through a boss fight with sheer determination. It will be a lot harder, but it can be done.
I also feel like TL2 has a better grasp of long-term replayability than D3 did. In TL2, when you finish the game, you take your character into a NG+, the enemies match your level, and you keep playing. All the way up to level 100. And even when you hit the cap at level 100, you can still continue to make NG+, to the point where enemies could be twenty levels above you.
I'm not sure why Blizzard decided that you would only finally unlock the toughest challenge at max level, when you could no longer advance your character (something they clearly want to backpedal on with their Paragon system), but TL2 just feels more natural, and more encouraging in regards to leveling.
I also like that TL2 enforces the more old school character building ideology, in that your decisions are (mostly) permanent. You can undo your last three skill points, but anything before that is stuck in place. There are (currently) no ways to respec your character, so the decisions you make are permanent. I did like the ability in Diablo 3 to try out different builds on a regular basis, but the sacrifice was that you didn't feel quite as connected to your character. Your character was skin you slapped on an ever-changing combination of skills, as opposed to something that you slowly built and cultivated over many hours of play.
Torchlight 2's art style also appeals to me more, though this is entirely subjective. D3 was a gorgeous game too, but I think where Blizzard tried to straddle a line between the gritty realism of the earlier Diablo games, and a stylized "WoW" appearance, Torchlight 2 just completely invested in their stylized look. It feels more cohesive, and I just enjoy it more overall.
To sum up my feelings on Torchlight 2, I'd have to draw on a debate I had with a friend while trying to compare TL2 to D3. Where he pointed out that they were both attempting different things, with different goals, and thus not suitable to direct comparison, I reshaped my argument to the following:
Torchlight 2 is the sequel that Diablo 2 should have gotten.