This answer is compiled from various answers buried in the Frontier forums. It is accurate as of late September 2015 but Elite is still evolving and this may change with the Horizon's release.
How is armour calculated for a ship?
Base armour is a basic statistic of each ship. Typically heavier and combat ships have more armour.
Armour contributes to the amount of hull hit-points (HP) that you have. Regardless of this number in your HUD you'll see this as a percentage.
Internal modules have their own HP, depending on the class and rating of the module. These HP are not added to the total, but represent how much damage the module can take before it is destroyed.
What difference do different types of bulkheads make?
The first three types of bulkheads affect the total number of HP your ship has, they do not reduce the amount of damage taken:
- Lightweight Alloy: Default
- Reinforced Alloy: Roughly 40% more HP
- Military Grade Composites: Roughly 95% more HP
The last two add the same amount of HP as the Military Grade Composites (MGC) but modify the amount of damage by the weapon type:
- Mirrored Surface Composite: thermal do 80% damage, kinetic do 120% damage
- Reactive Surface Composite: thermal do 120% damage, kinetic do 80% damage
As Pulse Lasers are overwhelmingly popular with players Mirrored is probably the most useful for PvP combat.
What do Hull Reinforcement Packages do?
Hull Reinforcement Packages increase the total number of HP your ship has, which has an indirect effect on penetration chance. In 1.4 they they didn't block penetrating shots but as of 1.5 they provide a small damage reduction (according to Sandro Sammarco):
We're adding a small amount of damage reduction to hull reinforcement packages. These are additive and increase the effectiveness of the packages (including module protection, as the damage reduction gets applied before modules are hit).
Does armour affect protection of modules or just the hull percentage?
The protection your modules have is always a chance based on your overall hull percentage, so a ship at 100% hull is far less likely to take internal module damage than a ship at 50%.
Where this makes a big difference is as your armour takes damage how effective it remains.
For instance, suppose you have a base ship with 100HP. A rival ship has the same hull, but has added Military Composites (so 200HP) and a 20HP Hull Reinforcement Package for 220HP overall.
- When both have initially lost shields their module hit chance is the same, about 2/5 (it varies by weapon)...
- After taking 50HP damage:
- The base ship has 50/100 left, or 50% hull.
- The advanced ship has 170/220 left, or 77% hull - this ship is less likely to take module damage.
- Further on they've both taken 95HP damage:
- The base ship has 5/100 left, or 5% hull - 4/5 hits are going to damage an module now.
- The advanced ship has 125/220 left, or 56% hull.
When the damage goes through it is applied to a model of the ship:
Each sphere represents an module location, blue (external) don't require penetration, yellow (internal) are checked against a penetration distance for the weapon. If inside a sphere there is a % chance of a module hit depending on how close it is to the center of that sphere.
If it reaches and hits an internal module the HP damage is split between the module the hull. This depends on the weapon type but most are about 80% to the module, 20% to the hull. This means you can shoot a ship and not see the hull decrease - you've damaged a module instead.
How does ship size affect damage calculations?
Ship armour has an internal hardness statistic, roughly based on size. Each weapon type and size also has a penetration statistic. These are compared and used to reduce the weapon's damage if the penetration is much lower than the hardness.
According to Mark Allen:
The main intent of this mechanic is not to penalise small ships, but to make large weapons effective against large ships without one-shotting smaller vessels - they don't actually do that much more flat damage than a small weapon but by piercing much better are far more effective against the harder target.
The net effect is that a Class 3 beam laser will only do about 3 times as much damage than a C1 against a Sidewinder, but thanks to this nerf the C3 beam will do nearly 7 times as much damage as the C1 against an Anaconda.
Again according to Mark Allen:
Sidewinder (armour hardness 20)
- C1 beam (base dps ~10, piercing 18) - total DPS = 9
- C3 beam (base dps ~25, piercing 50) - total DPS = 25
C3 beam is 2.8 times as effective as C1.
Anaconda (armour hardness 65)
- C1 beam (base dps ~10, piercing 18) - total DPS = 2.8
- C3 beam (base dps ~25, piercing 50) - total DPS = 19
C3 beam is 6.8 times as effective as C1.
This also means that stacked weapons (for instance the 4 C1 mounts on the Asp) are deadly for small ships but relatively ineffective against large ships with high armour hardness.
Note that much of this is likely to change. In the 1.4 release damage to the power plant module no longer kills the ship (making armour more effective overall) and the nerf applied to small weapons in 1.2 and 1.3 has made some currently useless (for instance missiles are very ineffective against large ships). In 1.5 hull reinforcement packages add a damage reduction that stacks.