Actually, I've recently been playing Diablo II again, and this is precisely false. The escape key doesnt pause the game. Not one bit. It does give you the 'save and exit' and 'options' choices; but it doesnt pause the game in doing so. You still have to either find a safe spot, or port back to town.
The two posters above are right, unless they changed this in a very recent patch (I know they have patched the game as late as last year I think). If you actually play in single player, ESC pauses the game (but it doesn't in multiplayer mode when you click multiplayer, choose TCP-IP and play "alone"... This is how I always played myself because it allowed for higher Frames-per-second and things re-randomized every time I'd start my game... So for me there wasn't a way to pause the game, which is what you may be remembering). At least this is how it was when I played last. I even think that the PAUSE button on keyboards worked to pause the game, but that's vague in my head, I know that worked in D1 anyway.