Item coloration is tied to rarity, amount of affixes or types of affixes the item has. As you upgrade and item it may also change color.

• White = 0 Affixes
  
• Blue = 1-2 affixes
  
• Yellow = 3-4 affixes
  
• Light Yellow = Champion Item or Personal Item
  
• Orange Background = Unique
  
• Green = Set item
  
• Light Green = Reforged Item (has a Set Affix crafted on to it)
  
• Purple Background = Exalted item, an item that has Tier 6-7 affixes. T6/7 are drop only, as highest tier you can craft is T5.
  
• Red Background = Legendary Items, and are crafted in game.
  
• Teal = Idol
  

Some other non-gear items you may see are:

• Red Text with Transparent Background = Rare Consumable (keys)
  
• Brown = Item Shard
  
• Orange Text with Transparent Background = Rare Item Shard
  

• Light Green Background = Set Item Shard