For instance, when you get to the end of normal, after you kill diablo, something happens that makes you start over at a harder difficulty like.
ex. A third party evil character sees that you killed diablo is like "oh snap! ok im going ot rewind time to the beginning, but this time im going to make the forces of evil more powerful!" and the nephalem gets sucked into the time warp portals retaining all levels gear, and gold.
thus explaining the higher level loot and the reason why the story repeats, and each time the story repeats something different happens, something slight and hard to see unless you're really looking for it.
I understand Blizzard did this to add length to the game without having to waste extra time a resources on story, but still I think this would've allowed them to do and made more interesting.
tl; dr it would be cool if there was a reason why the story repeats but the difficulty gets harder.