Here's how it works. And its not how anyone has described in this thread or by how the devs have said it is. You can see it yourselves ingame when comparing items.

item level determines stats on an item, but color quality enhances that. The colors rank from lowest to highest:

White
Pink
Green
Blue
Purple

Then you have normal quality and high quality. And from my experience this can be on white or blue (usually crafted in my experience). This enhances the stats further. Sometimes better than same item level but higher color, sometimes not. Its not very consistent.

The other tricky part is how item level is mostly level based. So there's level 71+ greens with same stats than level 70 blues. But they have a higher item level. Simply because the required level is higher. I think some may even have less stats.

To put it shortly, item level isn't very consistent. I believe it should be. But I don't key in the attributes. Thankfully the inconsistencies will have zero impact on gameplay as they only happen during the beginning of expansions and don't involve gear that would be low enough to bar entry into dungeons (despite possibly having the stats to be alright). But I do think they should consider a more consistent system so that there isn't any confusion.