What's the difference between Defence and Protection?

Defence is one of the harder to understand stats in the game.

Defence bonuses increase armor and resistance.

The armor stat decreases physical damage received by the percent shown in a a toon's stats.

Reststance decreases special damage in the same way.

Armor and Resistance Penetration can bypass some or all of this damage reduction.

Have a search of the forums and there is some detailed info about defence.