Armor is the only defensive basic stat in the game. It determines Victor Vran chance to Deflect an attack. A deflected attack deals less or no damage. When armor successfully blocks an attack it appears Deflect instead or next to the number of damage taken. Even monsters have Armor. Armor only prevents damage from weapons. Demon Powers do not take in account armor. Some destiny cards, like The Sun or The Guardian, effects surpass Armor entirely, so they cannot be avoided.
From Haemimont Games Customer Support: Armor is an attribute that grants deflect chance to both the hero and the monsters. Armor is either 0 or a positive number. As the armor improves, deflect chances increases logarithmically as follows:
20 * Log2 ( 1 + ( x + 30 ) / 10 )) - 40
As seen above, initial increases in armor are very beneficial but each next point of armor grants less deflect chance. Typically, the player is able to increase his armor to 100, but certain consumables and runes may add temporary bonuses for up to 150 or more. Deflected attacks deal no damage, but apply all conditions and side effects they would normally apply. Deflection is visualized with the text "deflect" over the hit character, instead of damage number. Attacks that don't deal damage cannot be deflected. Usually you won't gain much benefit from more than 120 armor.
Some breakpoints from the graph:
for having 20% chance of deflection, 40 armor is needed
for 40% chance of deflection, 120 armor is needed
for 60% chance of deflection, 280 armor is needed
for 80% chance of deflection, 600 armor is needed
for 100% chance of deflection, 1240 armor is needed