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For example (you probably won't see numbers this big, but it makes it easier to show the math):
With 0 armor, you have 0% reduction. If you have 100 HP, it will take 100 damage to kill you.
With 100 armor, you have (10000/200) = 50% reduction. If you have 100 HP, it will take 200 damage to kill you, so the first 100 points of armor give 100 effective HP.
With 200 armor, you have (20000/300) = 66.666...% reduction. If you have 100 HP, it will take 300 damage to kill you, so those points of armor gave you another 100 effective HP.
I use a variation of it myself in a game project of mine, for offense and defense both - Base Damage * ([Offensive Stat + 100] / [Defensive Stat + 100]) - as its good for preventing overpowered outliers from a stat being extremely high or low, without having to put a hard cap on said stat.
I am satisfy.