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What Is The D20 System?
The D20 system was originally created in 2000 for the purpose of Dungeons and Dragons' 3rd edition. It was called the D20 system because most of the system's mechanics are centered around the the twenty sided die, which is commonly referred to as the D20.
Wizards of the Coast released most of the D20 system under the SRD, or System Reference Document, allowing anyone to use, or tweak or add to any of the rules in the SRD for commercial products without having to pay Wizards of the Coast. This was a great benefit to publishers of supplemental materials such as third-party source books and adventure modules.
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Examples of D20-Based Games
Obviously, Dungeons and Dragons is the first name that comes to mind when talking about the D20 system, and even role-playing games in general. Dungeons and Dragons 3rd edition was the first edition to utilize the D20 system.
Pathfinder by Piazo Publishing is another very popular D20 based role-playing game. Pathfinder took up the sword where Dungeons and Dragons 3rd edition left off. Dungeons and Dragons 4th edition is really a much different game than 3rd, so Pathfinder stepped in and made only some minor changes to the mechanics. These days, Pathfinder is as popular, if not more than Dungeons and Dragons, especially among those who preferred 3rd edition to 4th.
Almost all well-known role-playing games have at least one or two editions that were based on the D20 system, including:
For more information on the D20 system, read this article from Wikipedia.
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Why Publish D20 Content?
The amount of content released in the System Reference Document is rather extensive. So much so, that the list of things that are not useable is much shorter. See some of the content that's not included here.
Dungeons and Dragons is arguably the best known role-playing game to date, and much of its content (from all editions) is easily recognized by almost anyone in the role-playing community. Publishing D20 based content gives you the ability to use creatures and spells and abilities that people recognize, and can understand. Otherwise, you'll have to create all your own creatures from scratch, and spend time developing and introducing them.
The release of the System Reference Document built a platform so large and so extensive that it's really become the gold standard of role-playing systems. It gives publishers the opportunity to focus on the game setting content, rather than the mechanics.
However, this license is no longer available for use as of 2008. If you were hoping to publish under the D20 license, you are out of luck. However, Pathfinder us a very similar system, and you can publish your content under that licenses the way you could have published D20 content prior to 2008. For more information on the Pathfinder license read here.