Preface
The current backpack system is a bit silly. We wear four containers, which makes managing them less intuitive. There is, however, a benefit to the current approach: it allows mixing typed containers, e.g. mining bags and regular bags. I propose a replacement for this system which is more intuitive but keeps the same benefit, and even elevates it: modular backpacks.
Concept
Backpack slots are reduced to one.
Modules each have a number of slots and a type restriction.
Compartments have a slot multiplier and a maximum capacity.
Each compartment can hold one module whose slot count does not exceed capacity. For instance, a compartment with a maximum of 8 can't contain a 10 slot module. Once equipped, the module's slot number is multiplied as defined by the compartment; an 8 item slot module in a 2x compartment grants 16 item slots. Backpacks contain a number of these compartments corresponding to logical storage units on them. A leather backpack might have a large main compartment and several smaller compartments, whereas a basket likely has just one very large compartment. In this way, player choice and tiered progression co-exist.
By pulling the quality and type of modules away from the backpacks themselves, the player is made to consider about what they want out of a backpack. Should I aim for few large compartments so that I can use a bigger herb pouch, or many small compartments so I can carry various types of items? Modules could even have their own 3D visuals, just to be fancy.