Hi, guys! I have a basic question I’d like to discuss, because you guys are awesome and you always help me. 
In Core, it lists LOOT as Milestone Rewards. But how do you award a hero with LOOT in-universe without them finding it or being awarded by an NPC? Does a cool ring materialize from midair? Where does it actually come from?
How have you handled this?
Thank you!
Where a piece of loot represents a character’s growth and progression, I don’t worry much about where it comes from, and I don’t think the players do either. If a character earns a milestone in the moment (or even between sessions), I am okay with the item just showing up, almost as if the character had it all along. As the DM, I tend to gloss over how these new items show up. Sometimes, the players come up with an awesome explanation of how the items came to be, which is really cool. They know the nuances of their characters infinitely better than I do.
I tend to use the above philosophy and not worry about the fiction too much because I want my players to experience the joy and thrill of “shopping” in the books when they go to pick out milestones, rather than my including too many milestones that exist in the world and forcing my idea of things on players (though a good mix is always fun).
As GM I always find a way for loot to show up be it an empty house with a squeeky floorboard and under it is an ancient item wrapped in cloth or on a body found dead, a gravemarker that has been partially dug and something shiny in the dirt and so many other ways to come up with. For a milestone ability though… a book is read that causes it to happen, a wizard rewards them for helping, stumble on a relic that bestows the boon on the pc… basically I find a way to make it happen and make sense. No magic appearing out of thin air just for the hell of it. I have a reward system in place though… XP’s if you will. As they gain them, they can eventually level up… things like more HP’s, Cast at a higher level… this kind of stuff. Those aren’t gained out of thin air though… they come from a character gaining experience in the game… getting better at what they do… smarter, stronger, faster… etc.
I think this is what I will do if I can’t think of a better reason. That is a good idea prompting players to explain it. Got Magic Gloves? Maybe the gloves you already had begin to glow with power that you didn’t know of before…now they’re “Magic Gloves”.
Another thought I had was this: by the time players are earning a milestone, they have usually left a trail of corpses in their wake, and maybe defeated a boss. My players don’t typically loot fallen enemies, surprisingly, so one explanation for a new milestone is that the piece of loot is indeed a found piece following a challenging room.
IMO, be it as GM or player, I prefer that an in-story source/reason is provided for every piece of loot. For me it’s def a factor for immersion.