ITEs are items dropped by hostiles that can be used to craft various weapons and armor. There are 8 different ITEs, and each are dropped by a different race of hostiles.
Spiderite
Spiderite is dropped by all Spiders, found on the higher levels of the dungeon.
It is used to craft the Spiderbane Set and also the Itesmithy.
Goblinite
All Goblins drop Goblinite.
It is used to craft the Horde Set and the Boots of haste.
Hobgoblinite
Hobgoblinite is dropped by any member of the Hobgoblin race.
It is used to craft the Yellowlick Set.
Direrite
Any Direwolves can drop Direite.
It is used to craft the Mangy Set.
Snickerite
The sneaky Snicker blades drop Snickerite.
It is used to craft the Stealthy Set.
Zombite
Any member of the zombie hordes can drop Zombite.
It is used to craft the Necrotic Set.
Ghoulite
Ghouls drop Ghoulite.
It is used to craft the Ghastly Set.
Ogreite
Any of the malicious Ogres can drop Ogreite.
It is used to craft the Beastly Set.
Burnite
Only The Burning Pet drops the rare Burnite.
It is not currently used for anything.