Creating an item, equipping it to a character?

How do I make an item, like on FusionFall? Are these two in script, not script, or some mix between the two?

Usually equippable items are implemented as prefabs, with attached scripts for data and behaviour, with a common script or base class for all equippable items. Then at equip time they are instantiated and parented to an appropriate transform in the character skeleton. You can later find equipped items by searching for specific scripts in the object hierarchy.