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Elite items are items in Diablo II that have the appearance and (in the interface) the same icon representing the Normal and the Exceptional items, but they have far better stats, and higher level / attribute requirements. They only appear in Lord of Destruction expansion. Monsters in Act IV Nightmare start to drop low quality elite items, but as soon as you progress to Act V Nightmare or Act I Hell, you will find better Elite items. Nightmare Diablo and Nightmare Baal might drop better elite items than the ordinary mobs over the Act IV area.
Note that drop rate of Elite items is much less than that of Normal / Exceptional items, even on higher levels. Elite items are often farmed for by players who seek to complete powerful Rune Words.