Fun (or sad) fact: they apparently lost a lot of the source code and assets. Looks like they were able to recover most of the code, but not the assets [1]
They said they lost the source code pre-release, but managed to reconstruct most of it. Given that it was released and that there have been many patches, I think the source code is fine.
I think the only thing they really lost are the hi-def assets from which the lower-def ingame assets were created.
They said "It would make it very difficult for Blizzard to do a Diablo 2 remaster because all the assets we used are pretty much gone. They'd have to make them from scratch."
I can't think of any other way of interpreting it.
To be fair it wouldn't surprise me - this sort of thing was pretty common back then. You'd create high def 3D models and then render 2D sprites etc from them.
Can you point to where? I can't find it, and a quick search for "resolution", "high", "quality", "def" turned up nothing. They say they lost the art assets but a bunch of pixel art tilemaps would fit that description, especially if they were composited down during the build process.
[1] https://www.gamespot.com/articles/how-diablo-2-was-almost-lo...