There are 4 difficulties: Casual, Normal, Veteran, and Elite, and in addition a hardcore mode. Can be seen on this video at around 2:50.
As the official site states:
Since there are no real benefits for picking hard difficulties other than fun (you don’t get better loot), you are free to play the game how you most enjoy. If you like being overpowered… you can play normal mode. If you like a serious challenge, play elite (which is much harder than very hard in TL 1). If even Elite is not enough for you, you will be able to easily download a difficulty mod and challenge yourself further.
The loot and drop rates don't change, only monster health and damage change.
And there is always the option to create your own difficulties with mods, to suite your specific desires.
According to the list on the Torchlight wikia:
Fish sizes
Normal - Transform for 5 minutes
"Big" - Transform for 15 minutes
"Giant" - Transform permanently, until another fish is consumed. If this is a non-permanent fish/egg, then after that one expires your
pet is transformed back into its original form.
Fish Types
Jackal Bass - Transform into a Jackalbeast.
Largemouth Bass - Transform into a Mimic.
Warsnout - Transform into a Warbeast.
Tunnel Shark - Transform into a Molebeast.
Web Fish - Transform into a Spider.
Flying Fish - Transform into a Swampflyer.
Bonefish - Transform into a Torso.
Crab Egg - Transform into a Crab Warrior.
Vampiric Spider Egg - Transform into a Vampiric Spider.
Transformation effects
Jackalbeast: Increase poison armour by ~100% and grants a small amount of poison damage.
Warbeast: Increases base average damage by ~85%.
Spider: Grants immobilizing web attack.
Mimic:
- +25% physical armour
- +66% elemental armour
- +50% HP
- +33% damage (base)
- +90% Interrupt Resistance
Molebeast: 20% chance to Stun target for 3 seconds
Swampflyer: +33% Attack Speed
Torso:
- +20% damage
- +60% elemental
- +25% HP (base)
- Shreds armour
Crab Warrior:
- +100% physical armour
- +100% elemental armour (base)
Vampiric Spider:
- Attacks steal life for you.
Other fish (direct effect on pet, or misc.)
Frenzy Fish - For 5 minutes gain:
- 33% Faster Movement
- +33% Attack Speed
Gold Fish - Not pet food. Just sell it.
Prismatic Morey - For 5 minutes gain the following:
- +25 Critical Hit Chance
- +100% to Fire Damage
- +100% to Poison Damage
- +100% to Ice Damage
- +100% to Electric Damage
Best Answer
I believe that "secondary" targets are essentially those who are damaged via a weapon's splash damage. From one of the load-screen tips:
So, the weapon you picked up will modify the amount of damage done to targets hit by splash damage (i.e. not the individual monster you are actively attacking).