Many people have reported that sleeping doesn't heal HP granted by armor.
I have now looked into the issue a lot and think I know what is happening.

TL;DR - Its a SRR bug.

It looks like every time you equip the +HP armor, it does two things
1. It increases your max HP
2. It adds to your current HP.

This makes sense, except it seems to do it in that order and it seems to store your HP as life lost.
Lets assume you have 50 HP.
If you are at full health, it will display as 50/50.
I think SRR stores that as Max Health 50, and Damage 0.

If you then equip +10 Armor, your health will become 70/60.
Base Health is increased by ten, and 10 health is added to your current health.

If you were injured on the other hand, you would see this
If you are at 35/50 health. The system stores that as Damage 15.
You equip +10 armor increasing health by 10 and healing 10. 55/60

Or something like that.
Without knowing the SRR code that's what appears to happen.

Thoughts?