@Zina You start out with 10 luck, and then can level 8 skills, each of which add 10 luck to this original 10, making a maximum of 90.
Then, the “Drop Rate Modifier” is calculated with the formula:
Drop Rate Modifier = Drop Rate Modifier Base + ((Luck - Attribute Base Value) / (Attribute High Value - Attribute Base Value)) * (Drop Rate Modifier High - Drop Rate Modifier Base)
If we substitute in values (for maximum luck) we get this:
Drop Rate Modifier = 0 + (90-10)/(100-10)*(1-0)
= 0.8888...
This then gets turned into 88%, which is then added on to the original proportion of drops, but for the sake of multiplication we will call the modifier 1.8888.
Then, this modifier is what you multiply the probabilities of block drops by (maybe creature drops too). For example, the probability of a fibrous leaf being dropped from a foliage block with base luck is 0.029999999329447746, which is roughly 3/100 blocks broken (for simplicity’s sake).
If we then multiply this by 1.8888… we go up to a chance of roughly 5.66/100 blocks broken.
There is also a relatively small change in drops from one level to the next: for example having only 7 luck levels would give you a drop rate modifier of 1.7777… but multiplying this by small probabilities gives a very small change:
the drop rate of fibrous leaves would be 5.33/100 blocks broken, as opposed to 5.66, which is a negligible change.
In terms of whether luck affects creature drops, I’m not entirely sure, but I am pretty sure it does, and always has done?
(obviously maybe not, as quite a few people say it doesn’t…) BUT the description in game does say:
“The amount of luck you have affects your chance of receiving rare Drops from Blocks or Creatures.”
EDIT: (thanks @OmniUno) max luck is 100 using the all attributes skills, which overall would double the chance of a drop (pretty much, if we round 99.9999999… to 100)