As I remember it...
Loot is based on game stage and modified by the world more recently. There are biome modifiers currently so that the harder biomes (wasteland, snow, and desert) increase the effective game stage and therefore give you better loot. There is/was talk of adding a modifier for POIs, too (but I'm not sure exactly how multiple modifiers will work, whether additive or multiplicative).
Keep in mind that "better" loot is subjective but it amounts to getting higher end gear (like steel versus iron weapons or armor, for instance) as well as higher end ammo (like AP ammo for guns). Some things become far less likely to find in the late game and some things stop dropping at all. Not everyone will be happy with the default settings.
As for stealth being affected game stage... sort of maybe? As your game stage goes up you will get tougher versions of zombies spawning as least sometimes. These tougher versions may have better stealth detection... but I'm not 100% certain that true.