Armor is a resource used primarily for damage reduction on ships. All ships start with a set amount of armor pre-built and can be improved further by loading produced armor onto the fleet.
Damage reduction on ships scales in a logarithmic manner and is applied as a percentage decrease of incoming damage. As such, you receive diminishing returns the more armor you add to your fleet, and can never reach 100%. Damage reduction is determined by the following formula:
Without accounting for Quris Art of War levels, a ship with 10K armor (i.e. the Babayaga) will have 50% damage reduction, a ship with 100K armor (i.e. the Mankind Gem) will have 77.57% damage reduction, and a theoretical ship with 1M armor will have 86.94% damage reduction.
Armor that a ship possesses by default is never consumed at the end of combat.