A bit more information:
1. The nerf does not follow you from server to server. If you get invited to another server you get full experience/items again. (does not include phasing someone else to your server from another server)
2. If you are not the one killing and are within exp range of mobs they will grant full exp (tested at 85 and then again at 87... at 87 the anti-grind did not kick in where as at 85 it did vs 90 mobs as an anti-power leveling mechanic)
3. Loot nerf is about 25-30% from my experience.
4. Its a very necessary thing from what i've seen from beta videos that lots of mobs are dropping ~1g per kill. (can't confirm that anymore). It also stops blizzard from needing to worry about instant respawns which allows for those doing quests to get their kills easier and quicker while "punishing" those whom are farming the same mobs over and over.
5. You can move from spot to spot (if you have multiple places to grind) and the penalty will not persist.


It isn't a very good anti-bot mechanic because bots do dungeons, bgs and quests as well.

It does hurt AOE farming for gold very badly if you do not have characters on multiple servers to transfer to.