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1 - % defense reduction (example: Void Shield).
2 - Flat defense reduction (example: Stone of Binding).
3 - % Penetration (example: Titans bane).
4 - Flat penetration (Example: Brawler's Beatstick).
EDIT: A little example:
If your target have 200 physical defense:
Void Shield (15% defense reduction) will reduce it to 170 physical defense.
Stone of Binding (+10 defense reduction) will reduce it to 160 physical defense.
Titans Bane (20% penetration) will bypass it to 128 physical defense.
Brawler's Beatstick (+15 penetration) will bypass it to 113 physical defense.
