Let's look at the OD&D equipment list:
|OD&D Vol 1, p. 14|
It's light: weapons, armour and gear in just under one booklet-sized page. Nothing really exotic except in terms of scale (the ships). There's no rules for any of this stuff, outside of where it appears in relevant other sections of the rulebook; for anything that doesn't, what the item does is rather obvious. More importantly, everything here fits into one of five core categories: weapons & armour, transport, food & drink, adventuring supplies, and what you might call "buttons"—items designed specifically to counter one type of monster. It's extremely utilitarian—some may even say sparse.
Now I wouldn't call this an example of brilliant design, because it's mostly not design, per se. Rather, it's the logical offshoot of OD&D being a game first and foremost. That is, OD&D was a played game before it was a published ruleset, and was intended to do a very specific thing compared to the "world's most popular fantasy roleplaying game" kitchen-sink, all-things-to-all-people school D&D embraced later. The people who played in the early games leading up to publication used it to do that specific, intended thing. Along the way, stuff came up, and the most relevant bits were added to the developing ruleset. The equipment list was just one of those things. The key thing here is that the list wasn't designed in a vacuum. In other words, it's mostly not the result of someone sitting down and saying, "okay, I'm making a game, and as part of that there should be gear for people to spend their money on". Instead, it's the largely result of "I already have a game, and here's the gear that people have been spending their money on as a result of playing it".
This might seem to be nitpicking, but reflects a key difference in approach. The first approach (building from design) is post-hoc and can be detached from the needs of actual play. What's more, it's often slaved to abstract notions of design, further detaching it from at-the-table needs. For example, the person making the rules-light game pares the list down because the game is about having less rules, while the person taking the more AD&Dish crunchy approach blows it up in size because the game is about giving you more; neither is really looking at what their particular game actually needs or what will typically see use in it. The second approach (building from gameplay) is founded primarily in at-the-table usage, and so only gives you what's relevant. It's not a medieval economic simulator. Instead, it's all about actually playing the game as it was intended to be played—adventuring.
Let's look at (some of) the 2nd edition AD&D list by comparison:
|2nd edition PHB (revised), p. 90|
|2nd edition PHB (revised), p. 91|
Weapons and armour are listed separately, as they're multiple pages themselves; we'll skip these, except to note that there's many more of those than in OD&D. Overall the full 2nd edition weapons and equipment list is 5-6 times the size of the OD&D list, reflecting the "more is more" school of design. Some of it is a useful bit of gap-filling over the OD&D version: the spyglass and magnifying glass, Greek fire, thieves' picks, grappling hooks, some of the animals, the costs for meals and lodging, and the rates for torchbearers (but note how there's no longer a ten-foot pole). A bunch of this material however falls into two broad categories: the micromanaged, and pure fluff. Micromanaged items are things like the fishing hook, flint and steel, or scroll cases, which you previously would have just assumed you had as a competent adventurer but now have to buy—and track. Another example would be yokes, bridles, saddles, saddle blankets, shoes and halters, which used to presumably come with the horse but now all have to be bought separately. Similar is baffling precision: a carriage costs 150 gp, but an ornamented one costs precisely 7,000 gp—no more, no less. What if I only want to invest 3,000 gp into pimping my ride? Too bad, apparently.
Fluff are items that you're likely to never see bought: the stuff that exists in the game universe, but has no direct relevance at the table. These things, like the capon (a castrated rooster), perfume, pounds of soap or figs, ox yokes, swans, barrels of pickled fish, funeral mourners, or the all important differences between a tabard, tunic, toga or vest are all unlikely to ever come up in actual play. The inclusion of such items is a result of D&D's steady drift from tightly bounded design and a clear focus on being a game to an attempt to be a medievalesque fantasy simulator for adventures of all kinds, including the non-adventure: MMO-style "crafting", economic speculation, and the tedium of day to day life.
Unlikely does not mean impossible, of course: the endless possibilities inherent in RPGs are the major part of their charm. However, every single sentence you add to a ruleset imposes a comprehension tax on the reader. It has to be parsed, sifted and analyzed, and takes up space in the book that has to be glanced over when you're looking for whatever it is you're actually looking for. As such, the more is not the merrier: you should be considering the actual gameplay use of every last thing you add. This goes double for options, since many have to be weighed against one another in addition to being weighed at all. Anyone who's played RPGs for any length of time knows that the longest portion of character creation is often the shopping part, where players take their starting coin, read over the equipment list, and try to decide what might be the most useful things to purchase—doubly so for people entirely new to a game, who have little to nothing in the way of experience to work with. In that light, the majority of the items on the 2nd edition list are just junk. This is where the "rulings, not rules" philosophy shines. If you need a cost for things like those it's unlikely to be more than once: wing it. If it so happens that your games keep revolving around the vital difference in cost between a pound of figs vs. a pound of nuts, you can always add that to your house rules document.
For Your Own Game
So what's the key takeaway here? I'd sum it up as:
A game's equipment list should be a list of functional items likely to be used in the playing of that game, not an attempt to list every possible item or to create a coherent glimpse of the world economy. An attempt to cover items outside of core gameplay is not only usually wasted, but actually harmful to play.
Someone here might point out ACKS as an exception, an OSR game literally built around an exploration of economic factors. However, I'd argue that in being designed to treat economics as gameplay, that game's thorough equipment list is fulfilling the first part of my takeaway above, rather than the second—it all has a reasonable chance to be used in the playing of that particular game (even if use is merely as an economic unit bought and sold as a commodity).
One of the things I wanted to do with my game was re-examine the core of D&D. For the most part this wasn't with the intent of reinventing the wheel—quite the opposite. It was more of trying to think "what is X rules component trying to do, and how can I improve on that while not sacrificing its key functionality?" Considering that goal and the above overview (and ignoring weapons, armour, hirelings, and general lifestyle costs for the time being and just focusing on gear), here's my California emissions:
And here's the principles that went into what's on my list, which I think apply to most any game but usually aren't articulated:
1) A list designed to point to and facilitate intended gameplay. You can use your equipment list to help reinforce the themes of your game and to show what's expected at the table in typical scenarios. The items here are specifically focused on classic D&D adventuring, particularly dungeoneering, just like the game as a whole. Equipment lists should not obfuscate or fight against your core design; by keeping it tight, you make clear to the reader what to expect and perhaps what not to.
2) An attempt to cover only common scenarios specifically rooted in gameplay. Following from the above, what doesn't fit the intended gameplay—or could conceivably fit but is so unlikely that the vast majority of sessions would never see it used—has been left out. The most obvious thing is the lack of fluff items: no swans or capons here. This is not the same as "streamlined" or "rules-light" design (the latter of which in particular I've come to see as a destructive meme, a means that has become an end and a mention of such in its advertising now perhaps my number-one reason to skip an OSR ruleset). That is, I haven't cut items for the sake of cutting items: what's been left out has been left out for a reason. There are no sailing ships, for example, because the number of times players need to buy a war galley are few and far between: I'll do some quick research or wing that if I have to, and the other 99 times out of 100 I'm coming out ahead in terms of rules text not spent and page count kept down. In a nautical game things would be different, with nautical rules then moving into the "common scenarios" category. Even then, there's a big difference between needing to be able to resolve sailing as a casual gaming factor and regularly having the need and the coin lying around to buy your own medieval battleship.
3) An attempt to reduce analysis paralysis. As above, there are no items not relevant to intended play, which helps here. But there are also no redundant options: everything has trade-offs in terms of cost, bulk, or other gameplay effects. And in a departure from the typical D&Desque equipment list, there is no price for items so cheap as to effectively not matter—they're free. This just comes out of an understanding of the larger rules engine: with wealth = XP systems, PCs are almost immediately awash in so much coin that counting coppers is almost never meaningful, and with encumbrance being a key limiter, there's still a clear cost to taking items even when they're free. With this approach, I avoid the tedious and time-consuming bean-counting phase of character creation. For unusual scenarios where the price of, say, a hundred shovels might matter, I can make that up the one time; an understanding that you only need to cover typical play and that ruling on oddities is fine is remarkably freeing.
4) A list integrated with the ruleset. I see a lot of equipment listings that tend to just tell you what the item is, a practice which ranges from "gee, thanks" when I'm told what a blanket is, to "okay, and so what?" when I'm given an item whose relevance is not immediately obvious, leaving me to wonder if it's pure fluff, or there's a use that may or may not come up later in the rules or during play. For that reason, every item has its encumbrance value, all relevant core gameplay effects (including page refs), and typical usage cases. For the latter, that's not all-inclusive: if you're a new player, being told that a torch helps with green slime doesn't really mean much. But it's helpful all the same: you can see that torches don't last anywhere near as long as lanterns, but have some combat and utility uses to compensate in addition to a larger radius, and make a consideration based on that.