Magic in the making
Magic items in my games are important, these are items of power crafted by beings able to bend the very fabric of reality to their will and the things they made have a storied history. Sure I'll chuck in a healing potion or a ring of protection +1 every now and then, but I really dislike the sense that once a player reaches a certain level a +1 sword is worthless and they're left just waiting for the next upgrade.
The TL;DR
Items grow with the players
Give them great big dollops of power, for just one action
Let players have history with the items
The D&D 5e rules for all the items described below can be found in this document:
Items that grow
I try to create items that awaken, reveal new powers or develop as the players level up and as they engage with the world and story.
There is one major difficulty with this approach: the identify spell. When players take this spell I let them know that while identify will absolutely reveal the current properties of the item it might also reveal a powerful transmutation magic on the item they're looking at that seems to be waiting for a trigger.
I almost never have a magic item they've identified or held for a long time transform into a cursed item here - your players will feel cheated and tricked if you do this, so be very careful to ensure there are solid story reason why something like this might happen.
My example item for this is the Cloak of Leaves.
Rowan, a druid in one of my games was approached by an ancient human who radiated the power of nature. Whispering quietly in druidic that they had seen a glimpse of the trials ahead of her and knew that she must have the Cloak of Leaves, this mysterious figure offered it to her with nature's blessing.
Later the party discovered that the druid was actually an ancient gold dragon, suffering under the effects of a curse that bound her. To save her they had to enter her dream realm, a pocket dimension in the feywild, that held her eggs and a sapling grown from the tree of life. Entering the realm they defeated the enemies, but during the battle careless use of fireball had damaged the tree. Rowan stepped up pouring healing magic into it - this was the time to upgrade the cloak! It burst into flowers and so she now had the Blooming Cloak of Leaves (in game it had a campaign specific title).
That campaign came to an end a few weeks ago, so I never got to play out the next two stages I had planned for this cloak as the players levelled up, but you can see these in the file linked above.
Great big dollops of power
Potions, spell scrolls, one off effects, effects that only target a very narrow group of enemies and abilities that only work in a specific circumstance or location.
Items like these are a great way to give players a great big power up that will let them survive or stay the course, even when struggling with ferociously unfair odds. Using items like this make it almost impossible to give a player too much power.
They're going to get this power once, or in very limited circumstances so if you get it wrong at worst it undercuts the tension in a single scene, or makes the same fall flat.
As examples of this type of item I have created two different items, both designed for low level players; Hunting Arrows and the Kinstead Brooch.
The Hunting Arrow is a simple arrow that has a chance to power up determined by a Nature check made just as the arrow is released. While this does add another dice roll to combat it means a character cannot rely on the bonus from the item, but must hope for it as they fire. With a +3 this bonus remains pretty useful even into higher levels (where they're more likely to succeed on the check) and staggeringly powerful at lower levels.
If you've read my post on worldbuilding you may have read that the elves in my world live in Kinsteads that are floating cities. To reach these all citizens have a brooch that allows them to fly up, while guests must wait for the wardens to provide them a lift. The Kinstead Brooch is what allows them to do this.
As it provides access to Fly and Sending this is a very powerful object, but the limitations of needing to be close to a Ward Post (only found directly beneath an Elven city) means you can give these to 1st level characters without concern - when they do get to use it though, expect players who can to thoroughly enjoy their aerial capabilities.
Items with a history
Tying an item into a player's backstory is great and allows you to make what might appear to be a relatively low powered item take on a significance greater than it might otherwise be worthy of.
The Book of Lost Tales is one of my favourite items and another example of an item that grew as the campaign progressed. This one also didn't get to its apogee before the game ended. The once a day bonus it provides to begin with is pretty anaemic, but so full of flavour. This item was given to Meleerritee, the bard in one of my games, by her mentor whom she had rescued at the very start of the campaign.
Mel treasured this book from the moment she received it and with her mentor creating songs that immortalised her heroism and then being murdered as the campaign progressed, I think it became more precious as the game unfolded.
Finally a lesson in how to fix it when you make things too powerful and how having a history with the item can help this.
The Queen's Mail was introduced with Brecaryn, a paladin (of the Crown) who had been stuck in time for over 600 years prior to the party awakening her.
This mail was part of who she was and a symbol of her loyalty, but once she had been awakened she had to face a hard truth. After Brecaryn became trapped in the time bubble her queen was discovered to be a necromancer and was destroyed by her own queen's guard.
All this was established prior to me seeing how disruptive the queen's blessing was in play. While the saving throw bonus was annoying the +2 to AC created a lot of problems as enemies able to hit her would almost always hit her allies.
While Brecaryn was working through coming to terms with the reality of her queen and re-aligning her loyalty, I saw an opportunity to remove this unbalancing item. Developing an existing story line I was able to arrange a fight with the last remnants of her queen's undead soul. Brecaryn struck down the person her queen had possessed and with that the armour shattered...
While the player was sad to see the armour go, they understood the narrative sense of it and (after I'd explained them) the reasons I'd needed to remove the item.
