the following is my understanding of how luck works based on Dev posts and studying the database. If someone has a more accurate understanding I’d love to be corrected.
So basically, whenever you get random loot generated said loot is determined by a roll on a table according to what you’re getting loot from (a named enemy, an elite chest, ect.). This roll is integer based meaning it’s a set range but the table exceeds the range - the example I’ve seen given for this is logging - the roll for generating loot on chopping a tree has a range of 10,000 meaning with no luck you are rolling 1 - 10,000. With Tier V luck food, which gives you a bonus of 2000 it changes your roll range to 2001 - 12,000. If the roll required to get a particular rare drop is 10,001 your chance to get that item have gone from zero to about 20%
Based on developer comments it seems like it shouldn’t be possible to have “too much” luck, because the only way this would be a problem if the your luck pushed your roll range so high that the thing you want requires a roll below your modified roll range, however since the theoretical maximum general luck bonus possible is just over 57%, or a roll range modifier of +5700, it seems highly unlikely that the devs would be dumb enough to put anything actually desirable below this level, evidenced by the fact that if what you wanted really was that low on the loot table it would be showing up more than every other kill with zero luck modification, assuming everything I’ve read about these systems are both true and working as intended.
All that said, the roll your luck perks modifies doesn’t actually seem to determine the loot you get, rather it determines which “bucket” of loot you will get a piece from. This language was used in a Dev FAQ and near as I can tell these buckets are just a group of loot that’s kinda similar - so for instance The Surgeon might have on it’s loot table buckets like “Unique Named Items”, “Global Named Items”, “Random Weapons”, “Random Armor”, “Crafting Mats”, ect. Each of these buckets are what have a range on the general roll table with the more desirable ones being higher up on the roll table and your luck perks give you a higher chance of hitting those buckets, but once the bucket is rolled there is a second process that happens to determine what loot you actually get out of that bucket that is, as far as I can tell, unaffected by luck perks and bonuses.
If this is all the case, I think the Devs need to seriously re-evaluate how the buckets are set up and provide more open communication about what these buckets are and how loot is generated from them. There is currently too much confusion surrounding the topic and it feels prohibitively difficult to farm for the specific items you want due to how much garbage exists in these loot buckets and how opaque the systems governing loot still are over a yet into the game’s lifecycle.