Best answer: Co-op level scaling means that enemies are leveled appropriately to each player, regardless of who is hosting the game.
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What is level scaling?
Level scaling means that enemy levels are scaled appropriately to the player. If your character is level 20, other enemies in the game will be around level 20 as well. This doesn't always stop endgame bosses or tougher enemies from existing at much higher levels though, nor does it mean those bandits you fought in the opening level will be beefier when you revisit the location.
The extent of level scaling varies between games. For the most part you'll see enemies scaled to your level at relevant points along the game. The first Borderlands introduced single-player level scaling in playthrough 2.5, and aside from Crawmerax, all enemies, regardless of location, did level with the player.
How does it work in Borderlands 3?
In Borderlands 3, level scaling kicks in when you jump into another player's game or they join yours. It used to be that enemies would be scaled to the host player's game, meaning that if you just started a game and joined someone who was a higher level than you, you'd be woefully underpowered — though this did mean you could level up much faster when your friend killed an enemy.
This time if you are level 20 and your friend is level 30, enemies in both of your games will match the respective player's level. You will see enemies around level 20 and your friend will see enemies around level 30. This doesn't mean the game is suddenly easier, though.
"But also there's got to be challenges," said Creative Director Paul Sage. "So imagine you're level 20 and I'm level 30 and I come into your game and you're fighting a level 25 enemy, for me that's gonna feel like a level 35 enemy, so it's all relative to how we're actually playing and what we're actually doing."
What does this mean for loot?
Loot will drop according to the player's level as well. Even if your friend is level 40 and you're only 30, you won't be finding level 40 guns dropping left and right.
Gearbox is also implementing a loot instancing system. Instead of sharing the loot pool with your friends and maybe missing out on an awesome weapon because someone else grabbed it first, you'll each have your own unique loot pool so you aren't "stealing" from one another anymore.
Can I turn off level scaling or instanced loot?
Yes. Both level scaling and loot instancing can be turned off for those who prefer the classic experience. You aren't stuck to one setting or the other.
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