In Diablo 3, it is a simple mapping of the higher the level, the better items that can drop. Unfortunately I can't find the Blizzard quote mentioning this, but it's referenced on a number of sites including the one quoted below plus this one.
A good explanation:
Which monsters drop which item tiers depends on the level of the
monster. Level 30 monsters will generally drop tiers of items that can
be used by players level 30 and below. A monster will not drop an from
an item tier that is higher than its level. A level 12 enemy will
never drop a Two-Handed Mace of any quality, since you need to be
level 13 to use a Two-Handed Mace.
Any monster that can drop a given item’s tier and is a higher level
than an item’s required level will be able to drop uncommon, rare,
set, and legendary armor from that given slot. What I mean by that is
if a monster is level 15 and it drops Two-Handed Maces, it will be
able to drop Boneshatter, which is the Legendary level 14 Two-Handed
Mace.
So this is a bit of an interesting issue. To answer this, we need to take a closer look at the damage formula:
Base Damage =
(weapon damage range + bonus damage from gear)
× bonus
from primary attribute†
× other class bonuses from skills.
Ability Damage =
Base Damage (as above)
× % Weapon Damage listed on the ability.
†1 primary attribute = +1% bonus damage
For the purpose of this question, we can ignore ability damage and bonuses from skills.
Understanding the Formula
Base Damage has two main components. Weapon Damage (this is the range you get, i.e. 4-6 for many starting weapons) and Primary Attribute bonus (this is 1% for every Primary Stat you ahve. In your case, Intelligence).
Because they are being multiplied, a small weapon range gets less benefit than a large one. 4-6 damage times 200% damage (from 100 intelligence) is only 8-12, whereas a weapon with 6-10 goes up to 12-20. The higher your weapon's average damage, the more valuable the bonus from stats is.
Applying our Findings
In your case, you've got a ton of Intelligence, which is great, and a really low damage weapon, which is less great. This means that really low damage is getting multiplied by a large value, which is still, unfortunately, in your case, a really low final value.
The take away here is that primary stat is not worth more than weapon damage. You need both to maximize your damage, which means you'd probably be best served by dropping your 20 dps weapon and picking up something nicer. As a comparison - My Wizard has a 33 DPS weapon, and she is only in Act III of Normal.
Best Answer
I started by removing my gear to get best controlled answer possible to make my damage not fluctuate so much. I equipped a low level bow to my demon hunter and went to hell act one. There I started my tests on zombies using my elemental arrow since it does the same damage under different element types due to runes. Against the zombies I use Elemental Arrow with no runes as a basic constant. It dealt around 200-300 damage each shot. I then changed the runes to Frost Arrow and electric Arrow. The outcome was the same 200-300 damage. I decided to test my idea on a more diverse group of enemies. I found some carrions and moon clan, repeated the experiment and had the exact same outcome.
I decided to use test on a creature that I was positive had some type of resistances, Inferno Zombies (which are on fire) in the Halls of Agony level 2 in Act 1. I shot the monsters with Fire and it averaged around 160-250 a shot. Electric averaged 200-300, and frost arrow averaged 200-300. I then decided to try to see how this scaled with gear. I equipped some of my gear and went back in to the area. My Fire arrows were averaging around 1,800 while my frost arrows were averaging around 2,800.
As A final test I decided to go to act 2 and hunt down a construct. I found a Chilling Construct and a Burning Construct and shot basic Elemental Arrow (which is fire damage) and averaged for around 2600 damage on the chilling but 800 on the burning. Swapped to the Frost arrow rune and averaged around 1000 damage on the chilling and 2400 on the burning. Then swapped to the Electric Arrow and averaged around 2500 damage on both constructs.
From the test I have gathered that an enemy has a high resistance to the element that it is, but will not have lower resistances to the opposite elements of its type. Also, an easy way to tell what element type a creature is would be by the type of damage it is dealing (example the Constructs stated above.)