I'm still a bit confused on how this works as well. I've played D3 on PC, so I totally get the normal vs nightmare vs hell comparison regarding loot. I totally don't get the sub difficulties though. I read directly on the blizzard website that the sub difficulty does improve loot at all levels...meaning even bumping up to medium raises the MP level which improves loot. However, every post I've found here, people say there's no loot difference between easy medium and hard.
only master 1 through master 5 affect the magic find
easy medium or hard is just for player difficulty
Are you sure? The Diablo 3 Console FAQ says:
Easy = Monster Power 0 Medium = Monster Power 2 Hard = Monster Power 4 Master I = Monster Power 6 Master II = Monster Power 7 Master III = Monster Power 8 Master IV = Monster Power 9 Master V = Monster Power 10