Quote from Demon665
It is not for rare drops. What that 1% does is when a white mob rolls to drop an item, any item, the game gives you a 1% chance to get another drop, completely independent in quality from the other item. That bonus loot, if it rolls to be dropped, can be anything form 1 gold to a legendary item and is only influenced by your magic find. Temsen quoted the blue post with that info.
Actually, it is always an item drop for the extra drop, it cannot be gold, health globe, crafting materials. There was a blue post on this a while ago. The first drop does not necessarily have to be an item, it can be a tome, gold or whatever, but the extra drop if you get the roll for additional drops, will always be an item. The quality of the item is in no way guaranteed, it may be a white or a legendary.