Typically you had 2 types of bots:

1. AutoIt bots that simulate human interaction

2. Other bots that manipulate game memory (usually caught
by the anti-cheat dubbed 'Warden', more on that later)

The reason most bots were PindleSkin bots, is because the PindleSkin unique monster spawns on Act 5 and can be accessed through a red portal. The level generated is always the same, so the path taken to the monster is always the same.

1.
AutoIt bots simulate keyboard input and mouse clicks, and can check pixel colors at an x,y location on the screen. This alone allows you to navigate to the portal, enter it, and reach the monster. Enter a predefined number of key strokes and mouseclicks to cast spells and kill the monsters, and afterwards collect the loot.

Some examples of usage:
Check the health and mana spheres pixel colors. You could estimate what percentage of HP or Mana your character had, by using some basic math, since the HP and Mana spheres were symmetrical. If the percentage was below a threshold, send keystroke 1, 2, 3, or 4 (this tells the game to drink a potion from one of those slots in your belt).

Checking inventory space and unloading items into the stash was done in a similar matter. The inventory is a 2d grid of squares, and each square has the same pixel color at the center. You'd count how much space you have by checking the pixels of each square and building a 2d array. You could also figure out how big an item was in terms of inventory space, by checking the empty spaces before and after lifting it off your inventory, and subtracting to get the difference.

Collecting the loot was initially done by using a d2loader pick-it hack, which injects into game memory, and uses a predefined list of items you want it to pick up. Now since this modified the memory, it was easily detectable, so when blizzard released the 'Warden' anti-cheat, it became useless.

Some guy by the name manus-magnus came around and released a new PindleSkin bot, written in AutoIt, which had a built in OCR. He was able to literally scan the items that were dropped, turn them into text, determine if they are rare, unique, or normal (based on pixel color), and whether to pick them up based on the pre-configured data the user specified.

He also took advantage of the ability to modify sprites on the client side, and add colored blocks to key points of interest places on the level. This allowed him to use these colored blocks as markers and navigate to reach the monsters he wanted to kill. All without manipulating game memory. I believe his bot included the 2 other unique monsters on Act 5 (Shenk and something else?)

Blizzard had such a hard time catching this bot, some believe it is the reason they added a 20 game / hr limit, and if you exceeded it, you got a temporary 15 minute IP ban.

2.
Non AutoIt bots relied on injecting into the game memory, and using a maphack to find the monsters on randomly generated levels. They were a lot more powerful, as they were able receive a lot more information from the game, but were usually banned swiftly. I don't know that much about the implementation details of the non AutoIt bots.

If you want to find more information, you can search around the AutoIt forums for a pindle skin bot, or search online for manus magnus pindleskin bot.