This describes the differences between 2E and 3E.
Note that in 3E, thieves are now called rogues and mages are called wizards.

Ability Scores
2E and 3E use the same ability scores: Str, Dex, Con, Int, Wis, and Cha. In 2E, to determine how a score in a stat affected your character, you had to look on a very complex table that was different for each stat. In general, in 2E, you only got bonuses and penalties if your stat was really high (15 or greater) or really low (6 or lower).

In 3E, all bonuses and penalties have been standardized to one table. Any roll where there is a modifier due to a stat uses the same modifier (so your bonus to hit and to damage from high strength are the same). The way it works is this: If you have a 10 or an 11, you get no bonus or penalty. 12 or 13 is +1, 14 or 15 is +2, 8 or 9 is -1, etc. Each two points higher or lower gives you +1 or -1.

In 2E, stats only went up to 25, which was considered "godly." Few characters, even with magic items, got stats that high. Very few things could increase a stat permanently, either. Most magic items that increased stats set them to a certain value, like the girdle of frost giant strength, which IIRC set Str to 21.

In 3E, stats go as high as you want. Every four levels you gain, you may increase one stat by a point. But you will have trouble reaching "godly" levels, as there are common monsters that have strength scores (for instance) in the 30's or even 40's. Items that give bonuses to strength, such as girdles of giant strength, give bonuses of +2, +4, or +6 rather than setting your ability score to a particular value.

In general, since bonuses start at lower ability score values in 3E than in 2E, characters have similar power in 3E with lower stats than in 2E. However, min-maxers beware: since penalties also start at higher scores, you can't necessarily take a low score in a "dump stat" and expect your character not to suck. All stats are important for most characters in 3E, and other than the low-charisma fighter, there aren't many characters that can safely take a very low score in a stat and expect not to feel the effects.

Saves
In 2E, your saves were fixed based on your class, and went down from near 20 to near 0 as you progressed. To save vs. a particular thing (and there were a lot of random different things to save against--wands, spells, breath, etc.) you had to roll below the number on a d20. Some spells gave you a penalty to your save, but for most, if you had a good save, you'd almost never be affected.

In 3E, there are only three types of saves: Fortitude, Reflex, and Will. Warrior classes get good Fort saves, which measure physical toughness, and the saves also depend on your character's Con score. Rogueish classes get good Reflex saves, which measure your character's ability to get out of the way of danger quickly; Ref saves also depend on Dex bonus. Will saves reflect your character's ability to resist many magical attacks--especially mind-affecting ones, and is dependent on Wis bonus. Classes that require mental focus (spellcasters and monks) have good Will saves.

In 3E, every save you make has a Difficulty Class (DC) that is a number you must roll higher than to succeed. The Fort save to resist a tiny scorpion's poison might be 15, but the DC against poison on the dagger of a high-level assassin might be 25. To make a save, roll 1d20 and add your class-derived bonuses and the stat bonus (Con bonus for Fort saves). A first-level fighter with 14 Con would roll 1d20 and add 4 (2 for Con, 2 for a first-level fighter). He would resist the scorpion's poison about half the time, but would not be able to resist the assassin's.

The 3E saves are one reason that taking dump stats can be very bad for characters. A low-Wis fighter will succumb to many mind-affecting spells, since fighters get bad Will saves to begin with, and he will suffer an additional penalty due to low Wis.

Hit Points
In 2E, after reaching a certain level (between 8th and 10th, depending on the class), characters stop rolling dice for HP. In 3E, characters roll a hit die and add their Con bonus every time they level up, regardless of how high their level is. Exception: above level 20, in the official rules, advancement isn't the same, though characters can still gain HP (in IWD2, advancement is not likely to change after 20th level, however).

Attack Bonus/THAC0 and AC
In 2E, armor class started at 10 and went down (unless you wore no armor and had a bad Dex score, in which case you could have a higher AC). Each character had a THAC0 score, which also went down from 20. To determine if you hit, you roll 1d20, subtract your THAC0 from the target's AC, add your attack bonuses, do a little dance, and pray that the DM did the math right because you had no clue what you were doing.

In 3E, armor class starts at 10 and goes up (unless you have a Dex penalty). Armor, defensive magic, and high dex all add to your AC. It's not unusual to see characters and especially powerful monsters with AC's in the 20's or even 30's. Bonuses to AC generally stack, so you can wear that ring of protection with your magical armor, but identical bonuses don't stack, so you can't cast armor while in full plate and expect your AC to improve (and you won't derive much benefit from wearing two rings of protection simultaneously, though you can if you want).

In 3E, to see if you hit, you roll 1d20, add your attack bonuses from your class and from either Str or Dex (ranged attacks use Dex), and compare to the target's AC. If you roll at least this number, you hit. This is identical to the system for saving throws (and pretty much everything else in the 3E "d20 system"--hence the name).

Attack Bonus/THAC0 and Multiple Attacks
In 2E, each character's THAC0 improves (goes down) at a different rate. Fighters had the best progression, then clerics, then rogues, then mages. Mages only got one point every three levels! The only way to get more than one attack per round was to use a bow (bows granted two attacks), to take weapon specialization, or to be a fighter (fighters got additional attacks at certain levels). Each time you got extra attacks (except from the bow) you got a "half-attack"--an extra attack every other round. The best you could do without magic was 3 attacks each round (at least 13th level fighter with grand mastery).

In 3E, all that crap gets thrown out. Your class' base attack bonus (BAB) is represented by a number that you add to your attack roll. Fighter-types start at +1 and go up one each level. Clerics, Druids, Rogues, and Monks start at +0 and go up three every four levels (+0 +1 +2 +3 +3 +4 etc.). Mages start at +0 and go up every two levels, starting at 2nd level (+0 +1 +1 +2 +2 etc.). Note that this makes rogues, wizards, and sorcerers better fighters than before.

Every class can get extra attacks in 3E, but not from using a bow or from weapon specialization. If your class' total BAB (whcih doesn't include strength or other bonuses) is at least +6, you get an extra attack at five less than your BAB. At +11 you start getting a third attack at -10. A 20th-level fighter attacks at +20, +15, +10, and +5. Nobody can get more than four attacks this way, though, so if your BAB goes above 20, you don't get anything new. Monks get extra attacks every 3 points of BAB rather than every 5, but only if they're unarmed, and can get 5 attacks; 19th-level monk gets attacks at +14, +11, +8, +5, and +2. Even mages can get extra attacks at high levels.

Bonuses
In 2E, whenever you got a bonus to a stat, an ability, to attack rolls, or to AC, you just got it. There were some restrictions, like you couldn't wear rings of protection with magical armor, but basically, you could combine pretty much any items.

Also, in 2E, many items and spells set a particular stat or ability you had to a certian value. For instance, Gauntlets of Dexterity set your Dex score to 18, regardless of what it was before. Certain strength spells set your strength to 18/75, regardless of whether your original score was lower, higher, or the same.

In 3E, any spell or item that grants a bonus or penalty to a particular stat, ability, skill, to BAB, to saves, or to AC has a type. The folowing are some of the available types: Arcane, Enhancement, Dodge (AC), Divine, Deflection (AC), Masterwork (to hit/armor check penalty), and Miscellaneous. Others exist as well. Except for Dodge and Miscellaneous, two bonuses of the same type do not stack--if you have an item that grants a +2 enhancement bonus to strength, and a spell that grants a +4 enhancement bonus, then only the higher of the two bonuses affects the character. In other words, you can wear two rings of protection, but only the one with the higher bonus will affect your AC.

In 3E, no item or spell sets a stat or bonus to a fixed number (except for feeblemind, which drops the character's Int score to 1). Instead, spells and items give bonuses--usually in the range of +1 to +8. All stat-boosting items (headbands of intellect, gauntlets of dexterity, etc.) come in three flavors: +2, +4, and +6.

Note that for stat-boosting items, all bonuses are even. This guarantees that the bonus or penalty associated with that ability score will go up by exactly 1, 2, or 3, depending on whether the item grants a bonus of +2, +4, or +6. For example, two characters have 16 and 17 Str, respectively, so both have a +3 ability bonus from strength. If they each put on gauntlets of ogre power (+2), they will have 18 and 19 Str, respectively, and each enjoy a +4 bonus to melee attacks, damage rolls, and strength-dependent skills. The ability bonus goes up by one no matter what the character's original score was.

Experience, Leveling Up, Multiclassing, and Dual-Classing
In 2E, each class had a separate experience table. When you took a class, you advanced on that experience table, and it told you when you were ready to get a new level. Tables started out exponentially, and then leveled off later (so experience needed to get to the next level usually doubled for the first nine or ten levels, then a constant amount of experience was needed to get to each new level). Experience from monsters was the same no matter what level you were at, so killing orcs at 20th level was still profitable as long as you killed enough.

In 2E, demihumans could multiclass, splitting their experience evenly between two or more classes. They advanced separately on each table, getting the best saving throw and THAC0 of all their classes, and taking HP equal to the average of the HP they rolled in each class (so a level 1 fighter/mage would take the average of 1d10 and 1d4 and then add his Con bonus). This form of advancement meant that multicalss characters were always a level or two behind single-classed characters between levels 1 and 9 or so, but then advanced only half as fast (or one-third as fast for triple-classed characters) after that, due to the nature of the experience tables.

Humans couldn't multiclass in 2E but they could dual-class, giving up their original class (and all its abilities) to start over at level 1 in a new class, starting at the beginning of the new experience table. They could never go back or advance in their old class, and only got the benefits of the old class (including favorable saves and BAB) once their level in the new class passed the old one. Dual-classing was the patient power-gamer's dream, since advancement in the new class was often very rapid (due to the exponential nature of the experience tables at low level) and the character usually caught up or almost caught up with single-class characters while regaining all his or her old class' abilities.

In 3E, there is only one experience table. A character starts at level 1 and gets a new level every time he or she gets to the next number on the table. The table increases geometrically and uniformly--it takes 1000 Exp to level from 1 to 2, 2000 from 2 to 3, 3000 from 3 to 4, etc. The difference is that the experience from monsters gets smaller (and eventually becomes zero) as a character levels up, so you can't kill rats to go from level 19 to level 20. Likewise, if the party defeats a very tough foe at a lower level, they will get more experience.

In 3E, all races can multiclass, though the system is very different from 2E multiclassing or dual-classing (neither exists in 3E). Every time the character is eligible to level up, they may take a level of an existing class, or they may start at level 1 in a new class. They get all the benefits of the new class (though not the special benefits all level 1 characters get, like extra skill points and a free feat--they aren't level 1 characters anymore). They add the new class' HP, BAB, and save bonuses to their existing ones.

For example, a second-level fighter gets enough experience to be a 3rd-level character. Instead of becoming a Ftr3, he decides to take a level of rogue. He adds 1d6 HP (plus his Con bonus), +0 BAB (level 1 rogue has BAB +0) and +2 to his Reflex save bonus (what the rogue gets at level 1). He is a level 3 character and has all the abilities of both a level 2 fighter and a level 1 rogue. Later, at level 4, he can choose to take a level of Ftr (making him a Ftr3/Rog1), Rog (Ftr2/Rog2), or some other class.

The only limitation on multiclassing is that if two class levels are more than one level apart (Ftr4/Rog1, for example), you get a 20% penalty to experience. You can ignore this penalty if one of the two classes is a "favored class" for your race, so an elven Wiz17/Rog3 doesn't receive a penalty, since wizard is the elf's favored class. For humans and half-elves, the favored class is whatever the highest-level class you have is, so a Ftr13/Rog2/Wiz3 won't get a penalty but a Ftr6/Wiz6/Rog1 would. Penalties are cumulative, so an elven Ftr10/Rog2/Brd2 would get 40%.

Weapon and Armor Proficiencies, Thief Abilities, Skills, and Feats
In 2E, weapon proficiencies were a separate thing that each class got at different intervals. You could add a new weapon or increase your proficiency in an existing weapon. There were a number of non-weapon proficiencies that involved role-playing aspects of the game but are not in the IE games. Also, thieves, bards, and the like got special thiefly abilities that they could add a certain nubmer of percentage points to each level.

In 2E, the types of weapons and armor a character could use was determined by the character's class. There were heavy restrictions on weapon use by clerics and druids and armor usage by mages and bards (if they wanted to cast spells, that is).

In 3E, weapon and armor proficiency is determined by class, but no class is restricted from using any weapon or armor (except the druid, though this restriction will not be in IWD2). Most classes start proficient in a lot of different weapons and armor (fighters, for instance, may use almost all weapons and all armor without a penalty). Your proficiencies are the sum of what your class(es) give you, so a fighter/wizard will be proficient in most weapons and all armor. Arcane spellcasters may wear armor, but there is a percentage chance of spell failure based on how heavy the armor is. Using weapons or armor you are not proficient in will result in penalties to attack and skill rolls.

Each character gets a number of skill points each level, based on class and Int bonus (or penalty--another reason low Int is very bad for fighters, who don't get a lot of skill points to begin with). Skill points can be used to buy skills like Spot, Listen, Intimidate, Swim, Jump, etc., but also thiefly skills like Pick Pocket and Move Silently. Some skills are restricted to a single class, but most can be taken by any class--at a cost. A fighter, for instance, would pay double the skill points to learn the Hide or Move Silently skills from what a rogue pays.

Any action involving a skill has a DC, like a saving throw. Using the Spot skill to see a brightly-colored creature might only be DC 5, but spotting a camoflaged creature in thick underbrush might be DC 25. Each skill has an attached ability score, too (the Spot skill uses Wis). To see if the task succeeds, roll 1d20, add the ranks you have in the skill, and add the bonus from the ability score. If you reach the DC or higher, you have succeeded. This is the same mechanic as is used for saves and for to-hit rolls in 3E.

Feats are heroic or special abilities that a character can learn, like the ability to wield two weapons effectively or the ability to brew potions. Characters receive one feat at first level (humans get two) and then an additional feat at 3rd, 6th, 9th, etc. Fighters and Wizards (and the Monte Cook ranger, which IWD2 will use), get additional feats. The feats each character gets from level do not depend on levels in individual classes, and may be any feat the character qualifies for. The feats from specific classes depend on class level and are chosen from more restricted lists (the fighter's bonus feats must be combat feats, like Cleave or Whirlwind Attack).

The old weapon proficiency points have been replaced by feats. A character may take a feat to become proficient in shields, heavier armor (none -> light -> medium -> heavy, each requires a feat if the character is not already proficient), all simple weapons (maces, daggers, etc.), or a single martial or exotic weapon (martial weapons include swords and axes, while exotic weapons are things like the spiked chain and nunchaku). Note that many characters already start with proficiencies in many simple, martial, or even exotic weapons (in the case of the monk). Additionally, any character with proficiency in a weapon can take Weapon Focus as a feat, which gives +1 to attack. Fighters can take Weapon Specialization starting at level 4; they receive +2 to damage with one weapon they already have Weapon Focus with. So a mage might learn to fight with a greatsword, and a fighter can fight with pretty much any weapon but might be especially good with a battle axe.

Weapon Damage
All weapons in 3E do even dice of damage, so instead of 1d6+1, a heavy mace does 1d8. Magical weapons usually add bonuses equally to attack and damage rolls. Each weapon type also has a critical hit range and multiplier (for most weapons, the range is 20 and the multiplier is x2). If your natural (unmodified) roll is in the weapon's crit range, you roll again--if you hit the target's AC again, you multiply your damage by the multiplier. The multiplier is really additive, so x2 is +100% damage, and x3 is +200% damage, and bonuses due to other factors (like spells) don't multiply--they add. For example, if you have a crit multiplier of x3 on your weapon and a spell that doubles damage, you do x4 and not x6 damage, since you add +100% and +200%.

Undead, oozes, and creatures with no discernable weak points cannot be criticalled. Critical hits do not multiply sneak attack or other bonus damage, unless it is bonus damage done by the weapon itself (like a flaming sword). Spells that require to-hit rolls (all touch spells) can critical, and have a range of 20 and a multiplier of x2 unless otherwise specified.

The advantage of using better weapons like the longsword or battle axe vs. weapons like maces and staves is that the better (martial) weapons tend to have larger crit ranges or higher multipliers. Longswords will crit on a 19 or 20, and axes do triple damage on a critical (the two are nearly equivalent in total damage done, BTW, which can be seen if you do the math!)

Backstab and Sneak Attack
In 2E, thieves could attack an enemy from behind and multiply their damage. In 3E, there are some classes (the rogue is the only basic class that can do this) which, any time an opponent is surprised, helpless, or flanked by party members, get bonus "sneak attack" damage that starts at +1d6 and increases with class levels. Sneak attacks cannot be used on any creature which cannot be criticalled (see above).

Spellcasting
In 2E, spells took different amounts of time to cast depending on the spell and the level, and could be interrupted by attacking the caster. In 3E, most spells take one "standard action" to cast, so the spellcaster will get the spell off on his turn, but there are many other ways to counter or interrupt the spell (which I won't get into here, because IWD2 will use something similar to the 2E rules). There are also special feats that spellcasters can take in 3E that raise the level of the spell slot the spell takes up, but enhace the power of the spell (these are also not in IWD2).

In 2E, only clerics got bonus spells for high ability scores (Wis). Clerics and mages were restricted from high-level spells if they had low Wis or Int (respectively), and mages could only know a certain number of spells per level unless their Int was very high.

In 3E, each spellcasting class has its own ability score it relies on--Int for Wizards, Cha for sorcerers and bards, and Wis for pretty much everyone else. You need at least a score of 10 + spell level to cast spells of that level. Wizards may know any number of spells per level. All characters get bonus spells based on high ability scores, not just clerics.

Clerics in 3E pick two "domains" at creation (this will work slightly differently in IWD2). Each domain has some special abilities and provides a list of one spell per level. Clerics get an extra spell slot per spell level that can only be used to take a spell from one of the two lists. Also, good and neutral clerics can convert any spell on the fly to a cure spell (maximum is cure critical wounds, not heal, so you need to memorize heal). Evil clerics can convert to the equivalent inflict wounds spells, but must memorize harm. Therefore, if you have a good or neutral cleric you may never have to memorize a cure spell. You cannot convert domain spells this way.

Another change from 2E to 3E spellcasting is in saving against spells. In 2E, most spells requred the target to save vs. spell or save vs. death to avoid or partially avoid the effect. The difficulty of the save was determined by the spell itself and not the caster (the difference between confusion and chaos was basically a penalty to save).

In 3E, different spells use different saves. It takes a Reflex save to dodge the effects of a fireball (half damage on success), while a Will save resists the effects of confusion. A Fortitude save might keep a finger of death spell from being fatal. The DC to save against is 10 + the spell's level + the caster's ability bonus.

Spell Lists
In 2E, or at least in the previous IE games, there were only two spell lists--arcane and divine. Sorcerers added spells to their repitoire each level, wizards and bards scribed scrolls to learn them, and clerics, paladins, rangers, and druids either got access to all cleric or druid divine spells. Cleric/rangers, due to engine limitations, got access to all druid and cleric spells.

In 3E, each class has its own spell lists. Bards and wizards have different spells to select from--bards, for instance, can cast some simple cure spells, but lack fireball and other flashy mage spells. Some spells are on multiple lists, such as the summon monster spells. A spell might be different levels for different classes--some level 4 paladin spells are higher-level cleric spells, but the paladin gets them much later and the save DC is lower (since they are lower-level spells).

If you have more than one spellcasting class, the spells you know from each class are separate, and the spells you memorize from each class must come from the appropriate list. For instance, even though the Sorcerer and Wizard lists are identical, you would need to choose magic missle as a sorcerer spell and scribe it from a scroll as a wizard spell to be able to cast it as a sorcerer and a wizard. A ranger/cleric does not share his spell lists as in previous games.

Also, many spells and abilities refer to the level of the caster (for instance, mage armor lasts for one hour per level of the caster). If a character has more than one spellcasting class, this refers only to the levels in the class from whose list the character is casting. So a Wiz5/Sor2 who has mage armor on both spell lists would have it last five hours as a wizard spell, but only two hours if it is cast as a sorcerer spell.

Resistances
In 2E, elemental and magic resistance was a percentage chance that the attack would fail or a reduction in the effectiveness of the attack. So if a monster had 50% magic resistance, half the time spells wouldn't work on it. If a monster had 50% fire resistance, fire would only do half damage to it. Some monsters were immune to weapons that didn't have enough of an enchantment--for instance, a vampire would be completely unharmed by a physical attack unless the weapon was at least +1.

In 3E, elemental resistances and damage resistance work differently, but are similar to each other. A creature with fire resistance of 10 ignores the first 10 points of fire damage it takes each round. A creature with damage reduction 5/- ignores the first five points of damage from each attack. Most creatures with damage reduction (DR) have something like 25/+3, which means that it ignores the first 25 points of damage from any attack that's not made with a +3 weapon or better. Another example: werewolves have 15/silver DR, which means that they ignore the first 15 damage from any attack not made with a silver or magical weapon (magical is "better" than silver).

Characters can get elemental or damage resistance through spells, feats, or by achieving high level in some classes (such as barbarian).

Spell resistance (SR) replaces magic resistance in 3E. Each creature with SR has a SR rating. To affect the creature with a spell, the caster rolls 1d20 + caster level + ability bonus--if the result is greater or equal to the SR, the spell succeeds (this is the same mechanism as attack rolls, skill checks, and saves). For example, if a creature has SR 28 and a 14th-level wizard with 18 Int tries to cast charm monster on it, then he would roll 1d20 + 14 + 4 (Int bonus). He would need to roll at least a 10 to affect the creature.

Monsters and Experience
Monsters in 2E had arbitrary attack bonuses, numbers of attacks, damage, and experience rewards. In 3E, this has been standardized. First, all monsters in 3E have ability scores, just like characters. Some have very low scores (a plant's Dex) or no score (a spectre's Con), and some have very high scores (an adult dragon's Str). These scores affect the creature's attack, AC, damage, hit points, and saves, just the same as they would for a PC. Also, each type of monster gets a different HD type (animals get d8 and undead get d12--but undead have no Con scores so they get no Con bonus) and BAB and save progressions based on HD. Monsters all have skills and feats, too, in addition to their special abilities.

The Exp for a monster is determined by its Challenge Rating (CR), a number that describes how hard it is for a standard party to defeat it. A monster with a CR of 7, for instance would likely be a good but not too dangerous encounter for four level 7 characters. The experience given to the characters for defeating a monster is based on its CR, the number of characters in the party, and the level of each character (the more characters or the higher level, the less experience, and vice-versa). It takes roughly 13 encounters with CR equal to party level for a four character party to level up in 3E.

Experience can also be given for thwarting traps and for story awards, as per the 3E DMG. Generally, if you outsmart or avoid an enemy, solve a difficult puzzle, or roleplay well, the DM is encouraged to give you experience, though the main source of experience is always killing, defeating, or otherwise beating enemies.

Magic Item Changes
Rings of protection no longer give bonuses to saves, but may be worn with any armor. They grant a Deflection bonus to AC only.

Items that increase stats do not set them to a particular number, but add +2, +4, or +6. Thus, Gauntlets of Ogre Power give a +2 Enhancement bonus to strength rather than setting strength to 18.

General
Multipliers are percentage bonuses and add rather than multiply (x3 and x2 gives x4, not x6, because x3 is +200%, x2 is +100%, and +300% is x4).

Bonuses of the same type do not stack (except dodge & miscellaneous bonuses). Thus, items and spells of the same or similar types tend not to have stacking effects.

All fractions are rounded down.

Class level or caster level is the level in a particular class. Caster levels for different classes do not add, so for a Wiz5/Sor3, the caster level is 5 for wizard spells and 3 for sorcerer spells.

Character level is the sum of all class levels, so a Ftr8 and a Ftr4/Rog4 are considered to be the same power (in 2E, a fighter at 8th level was equivalent to a fighter/thief at 6/7 or 7/8). Mutliclass characters sacrifice high-level abilities of either class for more flexibility, but get the benefits of all their levels rather than taking the best BAB and saves between the two.