A Scroll of Identify is a magical consumable item that was introduced in the original Diablo.
Use
The Scroll of Identify contains a magical spell allowing the user to see the hidden attributes of an item. Basically, it casts the Diablo I spell, Identify on an item.
These scrolls were not introduced as a special item in Diablo I. They were one of many scrolls of different spells that could be generated.
If the player right-clicked on them to use it. The cursor changes into a question mark (?) combined with an arrow. The scroll is consumed in the process. Even if you do not identify an item after consuming the scroll, you will not get it back.
Seeing their use, and due to the revamping of the Skills system, the Scroll of Identify and the Scroll of Town Portal were carried over to Diablo II. Here, when you right-click on it, the cursor changes form, but the scroll is not consumed until you click on an unidentified item.
Up to 20 Scrolls of Identify can be stored in a Tome of Identify.
In Diablo III all the player(s) had to do is right click an item in order to identify it: the scrolls have therefore been removed.
Gameplay
The Scroll of Identify quickly loses its usefulness after completing the Search for Cain in Act I of Diablo II. After that, Deckard Cain does identification free of cost (if you rescue him yourself).
They are still useful for item running. One can simply use them to see if the dropped rare, set, or unique item is of some use, so that it can be equipped or dropped for space immediately, as well as allowing any Charms found during a run to be equipped without running back to town.