Can someone please explain how defense works?

Defense gets really complicated.

The defense stat translates into % damage reduction (see the calculators above). Doubling your defense will NOT double your damage reduction. If that were true, it would be really easy to reach 100% damage reduction an be immune to damage.

Damage reduction can seem simple. Lets say you have a toon with 100 health that is getting hit for 100 damage. With 50% damage reduction, he only takes 50 damage, and can now take two hits instead of one before he dies. Using this simplistic approach, you can divide the toons health by 1 minus the % damage reduction to determine the effective health of the toon (100/.5=200). In other words, if you had a choice between +50% damage reduction and +500 health for a toon with 100 health, you would want to go with +500 health. If your toon has 1000 health, however, +50% damage reduction would net you +1000 extra health.

Now, once a toon has damage reduction, any additional health you add to them also adds effective health. That guy with 1000 health and 50% damage reduction? +10% more damage reduction would net you another (1000/.4=2500) +500 effective health, while +500 health would net you (1500/.5=3000) +1000 effective health.

This is starting to get confusing, but the point here is simple: For toons with high defense, health (or prot) is more effective than defense. For toons with high health, defense is more effective than health.

But then comes the wrench: Healing.

Lets consider our two options from previously: one toon with 1000 health and 60% damage reduction (let's call him Bob) and the other with 1500 health and 50% damage reduction (Jim). Based on the previous analysis, we would choose the Jim build, because he has 500 more effective health than Bob. BUT, lets try the two of them in combat against each other, and add offensive stats: each deals 1000 damage per hit, with 25% life steal:

Bob is worse, so he will go first.

Bob hits Jim for 500 damage and heals 125 (J: 1000, B: 1000)
Jim hits Bob for 400 damage and heals 100 (J: 1100, B: 600)
Bob hits Jim for 500 damage and heals 125 (J: 600, B: 725)
Jim hits Bob for 400 damage and heals 100 (J: 700, B: 325)
Bob hits Jim for 500 damage and heals 125 (J: 200, B: 450)
Jim hits Bob for 400 damage and heals 100 (J: 300, B: 50)
Bob hits Jim for 500 damage, heals 125, and wins!!! (J: -200, B: 175)

Bob took 3 1000 damage attacks, and had 175 health left over. His effective health was 3175
Jim took 4 1000 damage attacks and had -200 health left over. His effective health was 3800

Bob only won because he went first, so as always, speed is king-- BUT, Bob's defense not only increased his health-- it increase the effectiveness of his heals and REDUCED the effectiveness of his opponents lifesteal.

Give each of them a healer, and Bob may win regardless of who goes first.

Defense is not to be underestimated. Go take another look at the Stormtrooper, and consider him with defense mods and a healer.