From Diablo Wiki
The battle.net chat interface was completely reworked for Diablo II. Instead of appearing merely as names with a small icon for their class, as Diablo characters did, Diablo II characters appear lined up along the bottom of the screen, are animated, and are dressed exactly as they appear in the game. If you find a new green bone helm and put it on, you'll be wearing it in the chat channels on Battle.net. Character names (hardcore in red) and titles are displayed below the avatars.
Diablo II Character Avatars
Every character appears just as they look in the game. Whether Amazon, Assassin, Barbarian, Druid, Necromancer, Paladin, or Sorceress, your character will show up in their game armor, wielding their game weapons. The only exception to this rule is if you are a dead Hardcore character, in which case you will appear as a ghost, as seen to the right.
Ghosts can not join or create games; they can only haunt the chat channels and lament the misfortune that reduced them to their pitiable state.
Looking similar to the ghost is the Unknown avatar. This represents non-realm Diablo II characters (open realm/single player), but is also used for any unknown client. This can result from a bad connection to Battle.net, logging on with an IRC-client, or various other connectivity issues.
Besides Diablo II characters, you may see other individuals in the chat channels. These other avatars indicate that the person controlling them is not logged onto Battle.net through the Diablo II client, but is a Blizzard employee, is using another Blizzard game, is logged on through a chat proxy, or simply has a bad connection.
The Moderator avatar is granted to the user who has moderator power in that channel. This can be a Blizzard employee running an official chat, a Diablo II clan leader empowered to moderate a private channel, or just a regular Diablo II player who created a chat channel. Moderators wield the ban hammer, and will demonstrate their power if provoked.
Referees are individuals authorized to resolve disputes, and are often Blizzard employees or other officials involved in running tournaments or other sponsored events. They may or may not be using Diablo II as their client.
Other Blizzard Games
Players logged onto battle.net chat from these other Blizzard games get special avatars.
Diablo users all appear as the Warrior, whether they're logged on as one, or as a Rogue or Sorcerer.
Blizzard Employees and Admins
An authorized representative of Blizzard Entertainment, or Battle.net.
Only some Blizzard employees have their accounts set up to display the Blizzard or Battle.net avatars, and they only log on with them when they're on official business and need access to the admin tools. Usually, when Blizzard employees log onto Battle.net (which they do constantly) they use regular game clients, just like any other gamer. This lets them remain anonymous.
Speakers can be heard by everyone in a moderated channel. These are usually Blizzard employees or PR people involved in moderating chats and online interviews.