So I'm about to push 89 on my first toon, a necro, and I've been farming Nightmare Nalatos and the related repeatable quests up to him for gear/xp. It seems to be not particularly efficient for either so I was wondering if there are better spots for either or if this is just kinda how it works. Don't feel too comfortable pushing Hell yet with my gear but not really seeming to get many upgrades. Am I just doing it wrong?

Regarding Experience:
You get less and less experience as you outlevel the mobs you're fighting. This is to force you to push forward into more difficult areas in order to progress. There's an initial dip down in mob levels at the start of a new difficulty that throws this off but once you're into Act 2 it's escalating again.

Regarding Gear:
Check out the Wiki page on the Magic Find Mechanics Your chances of finding good loot come from four sources:

Magic Find

Chaining

Horde Bonus/Swarming

Monster Type

I find monster type and chaining to be the most important factors. Chaining triggers the possibility for champions to pull which in turn have the best drop rates. You're generally killing stuff quicker too if you're chain pulling instead of stopping each time to complete a quest.

Sweet. Thanks for the info