What is a spell?

Whether a skill is considered a spell is determined by the damage mechanisms of the missiles pertaining to the skill. The two most common options are:
- The skill takes damage from your weapon, known as weapon damage or WDM. Most times, they have some sort of weapon restriction.
- The skill takes damage based on the skill level, is affected by energy and usually has no weapon restrictions (*)
* Some spells require a weapon attack to trigger, thus they do require specific weapons. For example: paladin unholy melee tree or twin fang strike.

The latter is considered a spell by the game. Spells do not trigger lifesteal or any sort of procs (chance to cast modifiers).
There are a few cases where skills can be both a wdm skill and a spell, but most times it's only one type.

Spells are not directly related to elemental damage. A lot of wdm skills, such as Enfilade or Earthquake, will add flat elemental damage to missiles, but this damage is added to missiles dealing your weapon damage, so they are unaffected by spell damage.

% spell damage also works with passive elemental damage sources, but only on direct melee hits.

Passive elemental damage sources include items and skills that add some sort of elemental damage to your weapon attacks, but do not allow you to attack anything with the skills themselves. Flat elemental damage added to wdm skills by the skill itself also fall on this category.

Examples: Snake Stance, Plague, Curare, Way of the Phoenix, Kraken Stance.

A melee hit occurs when you swing your weapon at something and that something takes weapon-based damage. This does not include any weapon-based missiles or splash damage (eg. Crucify spikes, Retaliate nova) that may be emitted from the target.

There is one exception: % to physical/magic spell damage does not work on melee hits - Blizzard broke the modifier and I had to try and recreate it, but it is not an exact mirror of the other modifiers. This should be the only difference, though, and the only thing really affected by it is Rathma's Chosen.

Exceptions: feedback skills, some minions

Feedback skills do damage based on current vs. maximum life or mana: Mana Sweep, Arcane Torrent, Immersion, etc. These skills are based on a percentage of those stats, do not do flat damage and are therefore not affected by % spell damage.

Minions are quirky. Those that do innate elemental damage usually inherit the caster's % spell damage of the appropriate element; however, Acid Fiends gain much less of a bonus than expected, because much of their poison damage bonus is an innate (big) % poison spell damage modifier which is added to the % poison spell damage they inherit from you. Other elemental minions may or may not gain a bonus. Totems do gain your bonus. Additionally, spell damage buffs, such as Mark of the Wild or Bloodlust, can be applied twice to totems (they can inherit it from you when you summon them, and then you can buff them).

Any minion that only does physical damage (eg. barbarian spirits) is not affected by the caster's % spell damage. Of course, you can still cast something like Mark of the Wild or Bloodlust on them and it will affect them according to the rules for melee and/or missile attacks.

Weapon-based damage is not affected by % physical/magic spell damage.

Your war hammer will not start hitting harder just because you equip 50% physical/magic spell damage. Get a better war hammer, scrub.