Loot is any item dropped after killing an enemy. Some items only show up for you, others will be rolled for among the party.
Rolls can be Need, Greed, or Pass. Need rolls always come before Greed, and pass ensures you will NOT get the item.
Need rolls should only be used when you actually NEED the item, Greed rolls should be used for anything you don't intend to use or want to sell.
Need before Greed! Remember to keep your partymates in mind when rolling for an item.