The pit is located in act 1, more specifically, in the Tamoe Highlands - the area before the Monastery Gate. There is no waypoint for the Tamoe Highlands, so most pit runners will take the Outer Cloister waypoint and make their way from there to the Highlands. Take the Outer Cloister waypoint, exit the monastery, and follow the road, which will lead you directly to the pits. This way has proven to be faster and easier than the Black Marsh route.
The pit consists of two levels - Level 1, and Level 2. On level 2 of the pits there is an uber chest (Chest that appears on the mini-map and drops many items). The pits have become a very popular location for Magic Finding (MF) since the release of 1.10.
Why are the pits so good for MFing?
The pits are one of several locations that have the highest area level (area_Lvl) in the game, with an area_Lvl of 85 in hell. The Worldstone Keep, The Mausoleum and The Ancient Tunnels all share this area_Lvl of 85, along with a few select others. These other areas are listed in Appendix A, and some are covered with slight depth.
The pits are only truly popular in hell. In nightmare and normal, the area_Lvl of the pit is too low to hope for many good drops. The reason the pit is popular in hell is because it has the same area_Lvl as the Worldstone, but is much, much easier. There are very few elemental monsters, only one comes to mind, so resists are not as critical here as in other areas. This means that it is easier to focus on MF.
The pit is not the only popular location to MF in. The Mausoleum and Ancient Tunnels are other relatively easy areas, with that high area level. The downfall of these areas is that they are filled with undead. Undead means no leeching for physical damage builds, which automatically voids several characters. On the plus side, the Mausoleum has no normal fire or cold immunes, and the ancient tunnels have no normal cold immunes. This means that a single element sorceress could clear the appropriate area with ease, where clearing the entire pit would be near impossible without a means to defeat immunes.
The pit, although having each regular monster immune to a single element (save poison) is often preferred. Some 1.10 builds run dual element, or have a way to defeat immunes so immunities are not always a problem. A mercenary, lower resist charges or -enemy resistance mods can all be used if in immunity trouble. The pit is preferred because of it's size - not only is it reasonably large, but it has two levels. The uber-chest and it's numerous packs of uniques/champions are other reasons it is preferred, and regarded as the new MF hot spot. Not only is the pit a hot spot for MF, but it also provides excellent XP. Pit runs can provide quick levels, so they are best started as soon as you reach hell and have sufficient equipment to withstand the run. Even at high levels, pit runs can make a slight dent in your XP bar, an added bonus to the MFing.