A Reddit post had a comment that I think defines the term fairly well:
Itemization describes how items are designed in a game. A lot of things play into it. Things like item rarity and distribution, item stats and their ranges, item diversity, item requirements, how the items interact with skills, their balance, and probably more.
Emphasis mine
The former World of Warcraft game wiki has a general definition of the term itemization as well:
refers to the balance and distribution of items, their types, and the various effects, powers, and statistics attached to them.
Another post found of RPG Codex has a response to the question "What exactly is itemization?":
It just means "the subsystem of items". It's like how you would say an RPG has a good magic system, or a good combat system. Itemization just means the item system.
Emphasis mine
But I think the first sentence of the Reddit comment describes it best. It's how items are designed in a video game.