One of the larger changes introduced with Hack/Mine is the Area system. Areas consist of many chunks, randomly generated names, and random mob compositions. A dynamic atmosphere system was recently added as well.
Area generation is handled immediately after terrain is generated on a chunk-by-chunk basis. If an adjacent chunk has already been generated and has a "compatible" biome, the adjacent chunk's Area will grow into the current chunk. If no adjacent chunk has a grow-able Area, a new Area is created, with properties specific to the biome it contains.
An Area's name consists of a base name and a modifier (for example, "Hills" as the base and "Bloody" as the modifier results in "Bloody Hills.") The base is entirely dependent on the biome, while modifiers are only loosely dependent on the biome, additionally granting the Area special properties. The loose dependence on biomes is primarily to avoid silly names, like the "Gumdrop Inferno" (though it is unlike Frizzil to disallow such a thing.) Special properties currently include sky, fog, cloud, and overall screen color, as well as day and night lighting. Additionally, possible/required mobs to be spawned will be added shortly, with many more features planned.
In the future, there will be ways to "purify" an Area. For instance, defeating the neighborhood Lich would purge the Area of undead, or slaying the local Arch-demon would cleanse the lake of poison (Act Raiser anyone?) There is also talk of a "Base" mechanic, where rewards will be given for building a home in the more dangerous areas and keeping it intact for an extended period. This may also be a way to purify certain Areas.
Level of Difficulty
The levels of difficulty are created when the map is generated. The spawn will always be level one, areas becoming increasingly higher level the further out you travel out.
If venturing out far enough, the area levels will reset, resulting in a level 1 area next to a high level area (314 level area)
Another bug that exist deals with oceans. Because the area system is based largely in part by biomes, ocean biomes will typically follow area level progression rules when venturing away from spawn, until you reach land, where levels can be extremely high compared to the ocean. This is because as oceans are very large biomes, they are given their area level based on the distance from spawn, and while they go further off their level remains the same. But land, which features more and smaller biomes by comparison can go up based on distance from spawn as well. So once you get to the end of a level 11 ocean, you may reach a level 33 plains biome because, if you were to walk solely by land to get there from spawn, you would progress through the leveled areas as expected.