While a number of the unique items available to players of Diablo II are named after programmers or other denizens of the Blizzard Entertainment universe, one has a slightly different history.
Player-versus-Player has always been a feature of the game, ever since the original Diablo. In multiplayer, when one player character kills another, the erstwhile assassin has the privilege of collecting an ear off the corpse. The ear can be stored in Inventory, and when moused over displays the name of the player character it came from. For a while, especially when "town-killing" was prevalent, player-killers vied with one another to collect the most ears. The fad died when game-hackers discovered a way to create ears in a player's inventory.
While Blizzard has dealt with the worst of the PK abuses, it still continues to support PvP play on Battle.Net, despite player protests. The String of Ears simply commemorates this policy.
For those who care about such things, here are the stats from Blizzard's official Diablo II Lord of Destruction site, the Arreat Summit:
Defense: 78-91 (varies)(Base Defense: 29-34)
Required Level: 29
Required Strength: 20
6-8% Life Stolen Per Hit(varies)
+150-180% Enhanced Defense(varies)
Damage Reduced By 10-15%(varies)
Magic Damage Reduced 10-15 (varies)
(Only Spawns In Patch 1.09 or later)