Diablo III has hardly been under wraps since its Paris unveiling three years ago. It's been playable at BlizzCons and other events, and Blizzard's currently open mood has allowed press and punters to follow its development in some detail.

But last week was the first time the studio has invited press to its Orange County campus for a full briefing on the game - from first principles to latest developments, including a hands-on preview of the coming public beta. Despite the game's familiarity, we emerged from a 100-minute presentation and Q&A with our heads spinning - from the accumulated mountain of detail on this apparently simple and visceral game, from its quite dizzying quality, but also from the boldness of the thinking behind it.

The big shock is an officially sanctioned real money auction house - an in-game eBay - where players will be able to sell loot to each other in their local currency. This development is so daring, complex and potentially controversial, we'll discuss it separately in a full article soon. There'll be a separate but functionally identical auction house where players can trade using game gold.

The game's online features on the Battle.net platform were also confirmed. It will, of course, support achievements and the same Real ID centralised friends list as StarCraft II and World of Warcraft. You'll be able to broadcast invites to all your Real ID friends simultaneously and join each other immediately at any point in the game, the difficulty and rewards dynamically scaling to the number of players. There'll be a public game finder for co-op with strangers, and matchmaking similar to StarCraft II's for the 'Versus' competitive multiplayer mode.

A 'banner' system visually represents your play style and achievements to other players in a customisable pennant that stands behind your chosen character on select screens. Game characters are persistent and cloud-saved, and you can instantly swap items between them using an account-level shared stash, accessible in any town.

All of this comes at a considerable cost: Diablo III will not be playable offline in any form. Blizzard points to the deep integration of the online features (especially the character persistence) and to its zero-tolerance approach to cheating and account security to excuse this decision. It's a good argument - but it's no coincidence that it makes the game impervious to piracy, too.

The famous five

Lucky players who've registered interest on their Battle.net profile will be able to experience much of the above, excluding Versus but including the game gold auction house, in the beta test soon. This very short but alarmingly replayable snapshot covers the very beginning of the game - around 8 levels or so - and offers all five character classes to play: the barbarian, monk, wizard, witch doctor and demon hunter.

It's primarily a hardware test for the game's server infrastructure, says lead designer Jay Wilson, and its brevity is to save players from spoilers. "Really, we just don't want to ruin the story."

So you can beat the beta in an hour or so - although you can spend many more trying it out with friends online and experimenting with the five characters, who even at this early stage of the game, with few skills unlocked, display a breadth of tactical choice and an inventive capacity for spectacular slaughter. It will be very, very hard to choose which of these to roll first when Diablo III is finally released (and no, we still don't know when that is). The crossbow-slinging demon hunter, so impressive at BlizzCon last year, is a little muted at this early stage. But the barbarian has been given a huge boost by recent changes, while the martial-artist monk has recovered from a recent slump in form ("he was getting the crap kicked out of him" in the internal alpha, according to Wilson) to become an instant favourite with the visiting press.

The witch doctor's voodoo zoo of weird pets gets more insane with every viewing: human ladders of body-slamming zombies, totems that turn enemies into chickens. I spend the most time with the wizard, a class that instantly obliterates the quaint echoes in its name in a storm of withering lightning.

In previous demos, most classes were using placeholder mana pools to fire off skills, but they've all now had distinctive resource mechanics ironed out. The wizard spams spells with fast-regenerating arcane mana (I typed 'arcade mana' - a telling slip) while the demon hunter has a curious split pool of of Hate (fast-regenerating, offensive skills) and Discipline (slow, defensive).

Wilson's team has achieved an exquisite balance between the relentless, onrushing slaughter of traditional Diablo with a more tactically sophisticated and spatially aware style of play. "Spammable" attacks are blended with big-spending "breakout" skills and a new focus on defensive and crowd-control abilities, slowing being a favourite tactic. And thanks to the latest brave revision of the game's skill system, you can experiment with them all with complete freedom.

Skilling in the name

Each character now has just six active skill slots (and three powerful passives, replacing the more complex traits from last year). Skills simply unlock as you level up, as do the slots - you start with two. Skill points and character respecs have followed attribute points into the bin, and skills can be swapped in and out of slots completely at will. The system is breathtaking in its simplicity and flexibility.

Wilson explains the change of heart. Players faced difficult choices on whether to go deep or wide in their skill investment - yet those choices were subsequently trivialised by the ability to respec, and the whole system conflicted with the Diablo player's desire to swap disposable early skills out for shiny new ones.

"What the system wanted to be [is] almost, in some ways, more like Borderlands," he says. "If you played Borderlands, the primary thing that you're doing all the time is shooting a gun. And that changes frequently because you always get new items that change what you're doing, and that's what keeps the combat really interesting. Diablo is the same model, except we don't base our skills off weapons, we base them off of the skill system.

"If changing [skills] was a really big deal, we're basically telling the player, 'You're not really supposed to do that.' But they are supposed to do that. What's the problem of just letting players change the skills whenever they want?"

The runes that increase skills' power and alter their effects are the counterbalance to this freedom: this is where choice, investment and customisation come in, and where long-term players can start to build highly specialised variations of the classes.

Wilson demonstrates the amazing flexibility of the rune system by turning his wizard, normally the definition of a fragile 'glass cannon' caster, into a melee-focused battle mage - a build that took him a couple of hours to design ("it was a lot of fun") and for which he rejected another seven entirely viable skills. A ranged attack is transformed by a rune into orbiting armour. Other skills gain healing properties and reflective damage, have their delays removed, or leave crowd-controlling frost trails on the floor.

"One of the things we tried when we came up with each one of the classes is to come up with as many different alternate fantasies as we could think of for that class and then try to make sure that we accommodated those. We don't pretend to know all the variations... It's no mistake that there's a lot of options for making a battle mage with the wizard - it's because I think that's cool," Wilson says.

It's also a "highly inadvisable" way to play the class, he admits, but he's happy that playing Diablo doesn't have to be about 'theorycrafting', the obsessive fine-tuning of optimal character builds at the heart of World of Warcraft raiding culture. "One of the things I've always liked about Diablo is that, to a certain degree, the audience doesn't care as much about what's the best. They care a lot about what they want to make."

The many deaths of the Skeleton King

If Diablo III's systems are the last word in finely-crafted freedom, then the same unobtrusive care is being taken with the game's storytelling, a neglected element in the previous two games in the series. Chris Metzen, Blizzard's world-builder in chief - or senior vice president of creative development to you - thinks that's been a waste.

"The dirty secret is, Blizzard North, who built most of those games, they didn't love story," he tells me. "It facilitates this and that, but they were much more about the items and the slot-machine type gameplay of it all... It was always just a bitch to put you in the midst of the narrative for Diablo games.

"I've always held that Diablo was by far the most interesting universe we were sitting on top of. I've always believed this. 'Cause you know, Warcraft and StarCraft have their roots in... the zeitgeist of pop fantasy and science fiction, in many ways their worlds are built to substantiate any wacky idea. Especially Warcraft, goblins with jet bikes and all that kind of shit. I really think [Diablo] has the most thematic potential of any of our universes to be... I don't know, a bit more personally engaging."

Along with lead world designer Leonard Boyarsky, who worked on Fallout, Metzen believes that it's been necessary to shed a little light in Diablo's relentlessly dark world, to leaven the bleakness, to give players hope and something to fight for. But their biggest challenge was to find a way to deliver story - including the backstory about the creation of Sanctuary, Diablo's world, by the rebel demons and angels who sired mankind - without slowing the game's voracious pace.

"Even if you don't stop and listen to all the quest text, the context of where you are and what you're doing strings together a little more directly in a way that I think is non-cumbersome," Metzen says. "That's a concern we've heard from Diablo players for years and years: 'Don't bore me with it, I'm really just interested in the slot-machine.' I think we've found a good compromise. We're not attempting to build Dragon Age here."

It's mostly, says Boyarsky, about keeping the word count down. But the elegant direction of the adventure and the discreet, optional delivery of backstory - mostly using dialogue and audio clips, so you can listen while you kill - are also hugely effective. That much is clear even from the beta's mini-adventure.

Your character arrives at New Tristram, a gold rush town thriving on the ruins of the village that was the setting of the original Diablo. Or it was thriving until a meteor drove straight into the old cathedral and raised a plague of undead commanded by the Skeleton King, an old foe from the first game.

Your journey takes you through some light skirmishes to a mission to rescue the series' aged sage, Deckard Cain, from the cathedral, at the urging of his adopted niece Leah. Once saved, Cain sends you off to find the Skeleton King's crown in a series of crypts so you may return to the cathedral to summon and then slay him. (This guy is going to die a lot while the beta is running.)

On the way, you're helped by a blacksmith - the first of the crafting artisans who will follow and supply your campaign against the Burning Hells - and, in the final battle through the cathedral, a Templar knight. The Templar is a 'follower', a sort of customisable henchman. These will join you at certain points to throw the story into relief with their comments as well as assist you in combat.

This first episode is simple stuff, but what's striking is how smoothly it flows, how much clearer your sense of place and purpose are than they were in the earlier games, how heightened the flavour and more varied the pacing. Like everything else about Diablo III, its narrative has an effortlessness about it that belies how carefully put together it is.

Little efficiency savings are everywhere. You now have three permanent utility items: a Stone of Recall to get you back to town (no longer viable as an escape skill); a Cauldron of Jordan that you can use to sell items wherever you are ("'My bag is full' is not an awesome reason to go back to town," says Wilson); and a Naphalem Cube which converts items into crafting material. There's less makework and more time to spend on new systems like that crafting, which balances the randomised loot by allowing you to predictably plug gaps in your equipment with decent-quality items.

But Boyarsky reveals that the team didn't get to include every novelty that it wanted to. "At one point, we were putting player choice in," he says. "You'd choose to finish quests in different ways, and with the speed of the gameplay and multiplayer and the flow of Diablo game, it just did not work... It just stopped the game in its tracks. It was a great idea, but it really didn't fit." The restraint is typical.

Diablo III is more game, cunningly disguised as less. Even after completing the beta twice over, it was painful tearing myself away from it; it's so disarmingly gratifying and deceptively sophisticated, and so, so much fun. This tantalising preview will only stoke your cravings. The game itself - now quite obviously, and vastly, better than its predecessors - can't come soon enough.