Clicking the Customize button

will bring up 5 categories and 26 subcategories of items that you can dig into and customize further. When you click a subcategory, such as General Currency, it will expand into many sub-sub categories

Each of these is a filter rule. Let's break down everything in the S tier category.

To the left of the 'S' in 'S TIER', you'll see a checkbox that is selected. That turns the rule on. Below that is the option to 'Show' or 'Hide' the items in this category. In this case, you'll want these valuable items showing.
This uses a commonly used online tiering system that started in Japan that replicates school gradings, but with 'S' replacing 'A+'.
Right of 'BaseType' you can choose which items this filter rule applies to. If you'd rather see Greater Jeweller's Orbs here as well, you can expand 'A TIER' and drag them from 'A' to 'S'.
Sounds
Above the entry for 'Perfect Jeweller's Orb' there are four important settings. 'Snd' controls which sounds play. Try out 1, 6, 10, 12 and 13 as the highest impact sounds, 6 is by far the most popular to use for the very best drops.
I do not recommend the spoken word sounds such as 24. They are quiet early on and thus can be overruled by another sound that starts very soon afterwards. If you play '6' and it gets interrupted by a '1', the '6' will still be very audible.

Volume should be set to 300 or turned off. (To turn sound off, change 'Normal' to 'No Sound'. This is not at all recommended for good drops, but is very sensible for exalted orbs, useful Waystones and similarly cheap items)
I recommend using the highest impact sounds sparingly. Setting sound '6' for every breach splinter is funny exactly once, but will annoy you quickly.
Use a lower impact sound such as '3' for drops that are about one-tenth as exciting as a Divine Orb, such as many Greater Essences or Greater Jeweller's Orbs. You want to know something good has dropped, but you also don't need the game to distract you by making you think something truly amazing has dropped.
Beams and Icons
To the right of the sound selection are two options that govern minimap icons and light beams, both of which aid with visibility.

There's no right or wrong way to use these. My personal preference is to have beams on everything worth 5% of a divine orb or more, but you are encouraged to experiment. Find what works for your playstyle.
If you play in SSF, you might wish to set beams and minimap icons on all drops of particular bases that might craft into 'forever gear' for your build. For example, you might apply a beam to all item level 81 and higher
Ashen Staff bases if planning to try to roll +7 to fire skills on one.
Color Schemes
Just to the right of the 'Show/Hide' toggle, you can set the color of the text, border and background respectively.

White background is by far the most visible, and should be used sparingly. Pairing it with bright red, black and/or purple will provide extremely high visibility.
For items that are not as precious, such as Chaos Orbs or
Goldrim , you might wish to consider a less intrusive color such as yellow, orange or green.
Size
Above the beam and sound area, there is a slider set to 45.

Here you can reduce the size of items you don't want to see. This reduced size also applies when holding ALT to overrule your loot filter.
I do not recommend decreasing size on anything you intend to loot from the ground, even occasionally.
Do lower the size on gold and item bases you will absolutely, positively, never pick up, such as magic rarity
Wrapped Greathelms in maps.
For currency items the game drops a lot of but that you occasionally do want to pick up, such as Transmutes, I recommend leaving them at 45 and hiding them. You can hold ALT near dead rare monsters or other events that drop lots of loot to grab a small number for personal use.
Hiding Items

Here's what it looks like when an item is hidden. This is the default for Uber Plus Strict.
Note that 'Hide' is chosen on the show/hide toggle.
This means that the relevant items such as unique rarity
Felt Cap (which is
Goldrim) will not appear on your screen at all.
This is only a choice you would make if you have decided you are not willing to loot
Goldrim because you are unwilling to portal out of a map to sell it to another player (in trade league), or you have the item already and don't want another (if in SSF).
If you'd rather an item is shown instead, you can change it to say 'show' and configure how they appear. For example, these settings will show
Goldrim with no sound alert and no bright highlight

In time you'll be able to hover over an item to see exactly what each of those uniques could be, but for now, that's not possible.
