"Leg in town" or "lit" was a common term used by the players of the action-rpg Diablo II
in the era of "the secret cow level
". The cow level was the highest-end area prior to patch 1.10 (when it got nerfed) for players to level up to 99 and magic find items. Compare to todays "baal-running".
In game (on europe realm in specific) there was popular channels much similar to todays baal-run channels, known as "milka" (milka-1, milka-2, etc.) channels where you could announce and find runs.
In these games you could often see the term "lit", which means Leg in town, or Leg's in town. The leg is wirt's the peg-legged boy's wooden leg which you will need to open up the cow level.
Since the secret level has a hidden quest that will disallow a player to open the level anew after killing the "cow king" that can be found in the level, it was almost always needed that someone other than the creater opens up the cow level.
This person will get the leg from tristram and get back to town and then drop it and say "lit"