If your DM asked you to either have their PC give up his favourite magic item or cut off his own leg I’m betting it would be a really tough choice. And I think most players would rather the PC lose the leg than their magic item. That’s how important magic items are to most players.
When a PC acquires a new magic item it often become a significant part of that character. Many of us define our PCs by the items they possess, especially the really cool or powerful items.
Magic items are often seen as a sort of status symbol at the gaming table. If your character has magic armor, a magic cloak, a magic weapon or two, and numerous other miscellaneous baubles in his inventory he’s going to be deemed “better” than other PCs in the party who have fewer items with lower plusses. It’s not usually talked about but it happens.
With everyone clamouring for more items the DM’s natural instinct is to award magic items every time the PCs complete a quest or defeat a really difficult encounter. That’s just how D&D works – you kill monsters and take their stuff. And if they don’t have anything useful you sell what they had and buy something you can actually use. The result is a party with a ridiculous amount of magic items in their combined inventory, especially at higher levels. Welcome to the world of Monty Haul gaming.
So what’s a DM to do when he realizes that the party has too much stuff? The simplest solution is to take it away. However, this is not going to go over well with the players. After all, they didn’t do anything wrong. In fact they did everything right. They killed the toughest monsters and rightly earned all of their best stuff. Just because the DM was too generous doesn’t mean the players should suffer. So what other options are there?