Well, for level 3 weapons:
- Daimon, second form: hate this guy. Some people farm him, I avoid him.
- Death: pretty easy to farm. Go in alone as an MA or Ranger. Spam Richotte or Blast arrows at him. Time consuming if he keeps running away if you fail at stunlocking him.
- Fallen City and Stockade in post-Daimon BBI each has a chest you can savescum for level 3 weapons. Both maps have enemies that are problematic unless you're well geared. My initial farming involved hauling ass through these maps. Later on it become easier to just kill everything (apart from all the zombie dragons and Death that respawns)
Level 3 armor is all over the place. Death and all the high level dragonkin in BBI drop them, plus there are multiple chests that can contain it post-Daimon. The wiki has some amazingly detailed maps with chest drop lists.