[2023] MOVED: If you create a Desert world only does that mean loot stage never goes up?

Former. Loot stage multiplier is per biome, if you make it desert only, then you only get the desert multiplier.

That said, Biome multiplier is exactly that- A multiplier. Raise your actual loot stage by leveling and you'll eventually reach the point where you're getting snow-tier loot even in a forest, It'll just take longer/more levels.