Blood

"The taste of blood unleashes a magic few can control."

Blood, alongside bone, is one of the raw materials of life.

Lore
"Blood calls to blood, as they say, even if the blood between two is bad."

- Kara Nightshadow

Blood is a bodily fluid possessed by various beings, including humans, demons,  nd khazra. Angels do not possess blood, though have been shown to spill a similar substance at times, usually silver in color (or in the case of Imperius, gold). Use of demonic magic can taint the blood of humans casting it. Attacks from some demons can also taint a human's bloodstream; as the corruption takes hold, the color of the blood will change. Fresh blood is a necessary component in demon summoning. Demon blood contains 'life essence' that allows perception of far distant events. Dry demon's blood left on armor can react adversely to water, causing the armor to be destroyed in a flash of green light, after generating sulphur/blood-scented smoke.

At least in the culture of Ivgorod, blood tears are seen as a sign of being cursed, if not proof of being a demon.

Essence is carried in blood, and can be siphoned from it.

There is a saying in Sanctuary that "blood calls to blood," referring to the bonds of kinship that exists between blood relatives. This bond exists even if their social one is severed or damaged.

Human blood is useful in demonic rituals. The blood of khazra is similar enough to that of humans (per their shared ancestry) that it can be used in these rituals to similar effect.

In-game
For most enemy types in all three games of Diablo series, a pool of blood beneath a corpse is a clear indication of the creature being dead (nearly all death animations of monsters having blood involve bleeding). In the second and third game, wounded monsters may leave patches of blood on the ground when seriously damaged.

Bleeding is a form of Damage Over Time attacks.

In-game, human blood is red in color. Animals, especially insects and spiders, may have green or yellow ichor in place of blood, and may possess acidic or venomous blood which can harm humans when touched. Demons possess all colors of blood, including black, brown, green, blue, purple and even white. Some forms of Undead retain blood (it usually becomes darker or turns green), while others do not need it. Elemental beings, which are composed of non-living substances instead of flesh, usually have no blood, but sometimes bleed molten slag, water or mud when injured.

In Diablo IV, the player character(s) will carry their enemies' bloodstains after they have killed them.

Trivia

 * Blood and bloodlines are common motifs in the Diablo series. For Diablo III, Blizzard developers decided to err towards psychological horror rather than rely excessively on blood and gore, though agreed that had its place.