In Fallout 3 it affected the amount of Exp, health of enemies and damage recieved/dealt.

What does it affect in Fallout: New Vegas. Wanting to do a Master Difficulty + hardcoe run, and I want to know how difficult it'll be (Intending to play as a Sneak Sniper)

The difficulty makes enemies' health and damage larger, but experience doesn't change. Playing on Very Easy will give you the same experience points as playing on Very Hard.

But playing on hardcoe mode will give you a specific achievement, unlike playing on Very Easy.

yeah hardcoe mode is completely separate thing from difficulty. IIRC the slider only effect the health and damage output for enemies and yourself. they have more, and do more you do less damage.

Normal: Player takes 1x damage, enemies take 1x damage
Hard: Player takes 1.5x damage, enemies take .75x
V. hard: Player takes 2x damage, enemies take .5x

Personally I like more lethal combat but I don't like bullet sponges so I set the player damage multiplier to 2x and keep enemy damage at 1x.

Very hard makes it possible for casino guards in suits to be able to withstand Anti-Materiel Rifle bullets.

Playing on Normal is much more realistic.

So honestly, if you're looking for more difficulty, just play Normal-hardcoe.

Sounds like they needed to make a difficulty where you receive 2x damage, but enemies still receive the normal 1x damage. Then it would be realistic for both sides.

realistic is normal, why should you take more damage?, espically when you're wearing combat armour and the guys wearing a 200 year suit!

prehaps there could be a trait to increase the damage you take in exchange for xxx

Obsidian added enough useless traits when they released Old World Blues. The only good one that come out of the new batch was Logan's Loophole and I don't use it because I like being level 50

Rather than arbitrarily increasing difficulty via damage/HP, why not have V.A.T.S. chance (i.e. on Normal, V.A.T.S. acts as it does without perks, on Very Easy it's like having all the perks, and on Very Hard it's like your Perception is nil) and item HP (i.e. on Normal, items have the same HP as stated on the Wiki, on Very Hard they have half HP, etc) scale with difficulty. That way, it's still a fair, realistic fight (enemies still take the same damage that they should), but the overall game is harder. Item scaling would work as well (on higher difficulties, have food and stimpacks heal much less) and perhaps armor scaling would help make the game feel more difficult without being cheap. By armor scaling, I mean that all armors are scaled equally based on difficulty (on Normal, all armors will function with normal stats as stated on the Wiki, on Very Easy, clothing will provide some DT and armor will provide more than normal, on Very hard, clothing/no clothing at all will provide negative DT while lower armors provide no DT).

what they should have it do is more enemies spawn, and healing and bullets become more rare, and perhaps enemies use better tactics.

It would have been awesome if Obsidian had done it, but this is what mods are for: adding exactly what we want. Project Nevada alone provides a lot of the suggestions in this thread.