Diablo III received the long-awaited 1.04 update today which incorporated a lot of the standard class-balancing and bug fixes we've become accustumed to over the months. However, Blizzard snuck in something big, and it's an important one for endgame players.
Patch 1.04 adds a new Paragon System which creates a whole new layer of reward and bonuses beyond the current level cap of 60 and effectively extends the highest obtainable level to 160. Blizzard summed what it is and what increased Paragon levels grant you in the patch notes, which state the following:
After you hit level 60, any further experience you earn from killing monsters will begin to count toward Paragon levels
There are 100 Paragon levels
Every Paragon level will reward you with:
Core stats such as Strength, Dexterity, Intelligence, and Vitality in amounts similar to what you’d gain from a normal level
3% Magic Find and 3% Gold Find
In addition, a distinctive increasingly-impressive border will surround your character portrait in the in-game party frame to denote your Paragon progression, with a new frame earned after every ten levels. Your Paragon level will also be visible to other players wherever your normal level is shown
In essence, the Paragon System combats complaints about level 60 being unrewarding and magic find gear being a convoluted mess. Instead of feeling like Inferno runs are only to make your collection of virtual gold as large as possible, now it's also about showing-off how far you can push yourself through Paragon levels. Additionally, once you're at Paragon level 100 you won't have to worry about wearing magic find ever again, and can concentrate on pure, unadulterated damage and looking as cool as possible.
Admittedly, this does nothing to add new gameplay content beyond the four Acts included at the game's launch, but the upcoming PvP patch might be the solution to that admittable weakness.
In case you're wondering how sweet you'll look as you progress in Paragon levels, below is an image which shows all of its 11 stages of progression.
Ooh, ooh! I want a giant Diablo emblem around my avatar! Better get to work!