My understanding of how MF works is as follows. I'll use theoretical base numbers, since I don't know the real base chances for item types to be dropped.
Let's say hell Diablo, by default, has a 200 out of 10000 chance to drop a unique, 500 out of 10000 for a set item, 500 out of 10000 chance for a rare, and the rest (8800) out of 10000 for a magical item. The server rolls a few random-10000's. 1-8800 is magical, 8801-9300 is rare, 9301-9800 is set, and 9801-10000 is unique.
You get 222 MF for Uniques:+117% Sets:+153% Rare:+162% Magic:+222%.
This changes the chances to 434 out of 10000 unique, 1265 out of 10000 for set, 1310 out of 1000 for rare, and the rest (6991) out of 10000 for magic. The server rolls a few random-10000's. 1-6991 is magical, 6992-8301 for rare, 8302-9566 for set, 9567-10000 for unique.
Let's say a hell Flayer, by default, has 40 out of 10000 chance to drop a unique, 100 out of 10000 for a set, 100 out of 10000 for a rare, and 1000 out of 10000 for a magical item. The server rolls a few random-10000's. 1-8760 is a white item, 8761-9760 is magical, 9761-9860 is rare, 9861-9960 is set, 9961-10000 is unique.
You get 222 MF for Uniques:+117% Sets:+153% Rare:+162% Magic:+222%.
This changes the chances to 87 out of 10000 unique, 253 out of 10000 for set, 262 out of 1000 for rare, and 3220 out of 10000 for a magical item. The server rolls a few random-10000's. 1-6178 is a white item, 6179-9398 is magical, 9399-9660 is rare, 9661-9913 is set, 9914-10000 is unique.
If something like Arrows is selected to drop before rolling the random-10000, it either skips it or gets defaulted to white, anyway. If something that can't be unique drops, that random range turns into a rare with triple durability. If something that can't be set drops, that random range turns into a magical item with double durability.
The idea of "sweet spots" sounds like superstition and only noticing certain streaks to me, especially are there are no hard numbers to back it up. The same deal as all the superstition around the random raid drops and streaks in World of Warcraft. If my assumption on how MF works it wrong, please correct me so that I can adjust my gear accordingly.