The life loss prevention (petrified blood does not mitigate or modify damage taken in any way) applies all the time, but only prevents losing life from the lower half of your life.
If you are on full life with 1000 max life, and take a hit of 1000 damage with petrified blood up (assuming all the damage goes to life due to no ES/MoM/etc), you will still take 1000 damage (which matters for anything counting damage taken), but instead of that damage taken removing 1000 life, petrified blood prevents some of that.
Only 500 of that life loss would be from the lower half of your life, so the prevention only applies to that half. The other 500 life loss is unaffected.
A level 1 petrified blood prevents 40% of that loss, which is 200 prevented life loss - so in this case you take 1000 damage, but only lose 800 life immediately. Then it makes you lose 100% of the prevented life loss over 4 seconds - so you'd lose 200 life over 4 seconds, or 50 life lost per ...
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