Damage Reduction or Increases for Armor

For positive Armor, damage reduction =((armor)*0.06)/(1+0.06*(armor))

For negative Armor, it is damage increase = 2-0.94^(-armor) since you take more damage for negative armor scores.

Simplified Explanation

In laymay terms, each point of armour adds 6% of your MHP to your EHP.

We will try this out on a hero with 0 armour and 100 hitpoints. Ok, obviously 100 damage to kill.

With
the damage reduction formula, a hero with 1 armour has 5.66% damage
reduction. With 100 hitpoints, the amount of damage needed to kill him
is (assuming x is the amount of damage needed to kill him):

x * (100% - 5.66%) = 100
x = 100/94.34%
and we get the magical value:
x = 106 damage to kill

A hero with 2 armour and 100 health will need

x * (100% - 10.71%) = 100
x = 100/89.29%
and the magical value:
x = 111.99999999999999999999999999989 = 112.

And to see whether it really is linear, we do it at 50 armour, which is supposed to give 300% EHP, so 300 extra for 100 hitpoints.

50 armour gives 75.0% damage reduction.
x * (100%-75.0%) = 100
x = 100/25%
x = 400
OMFG ARMOUR'S SUPPOSED TO HAVE DIMINISHING RETURN. <- Proven wrong. Armour stacks with diminishing returns linearly, provided that hitpoints is a constant. And if you have noticed, it increases by percentage so in fact, your EHP increases exponentially with increase in actual hitpoint or max hitpoint.

Don't believe what I said? We use 200 hitpoints 5 armour as an example.

From the equation, 5 armour will give 23.08% damage reduction.

And 5 armour = 30% EHP. On a 200 hitpoints unit, it will be 260 EHP.
x*(100%-23.08%) = 200
x = 200/76.92%
x = 259.99999999999999999999999999992 = 260.
OMG MAGIC.