From what I gather, there's been a lot of talk about how armour should be handled in the game. Whether it should be ablative (HP), whether it should work like a spring (% damage reduction), or whether it should work like armour.
A scifi setting can justify ablative armour, or DUNE like armour that increases defence according to the level of the threat. But when you're talking about human armour, you're talking about level III kevlar vests using level IV ceramic inserts. It makes sense for human armour to be well within our understanding and seem plausible. Otherwise, what makes the alien scifi armour special, if you start with inertial dampeners or pseudo-magical armour?
% Based Armour
The issue with % based armours is they feel downright magical, and that any improvement in armour has massive effect, and yet is pretty darn pointless and useless at lower levels.
If you have 100 HP and a 5% reduction to damage (we'll ignore types for now), there is very little it can do for you. Any hit above 105 damage will incapacitate you. If damage averages high relative to your health, those 5 points don't make a difference. And if damage averaged even as low as 1 HP of damage, it just means it will take 105 hits to kill you, instead of 100 hits.
Meanwhile, if you make it 80%, boy does it look weird. A pistol that inflicts a maximum of 60 damage now only does 12, shaving off 38 points, but still taking off more than a tenth of your health. A .50 cal rifle of 500 max damage is reduced to 100, shaving off 400 points. So, with any damage variance, you can quite easily survive a shot from an anti material rifle, yet can be killed by 9 pistol shots.
Balancing % based armour is also really annoying, and it's the same work as balancing straight-damage armour.
Chris covered one of the points against this in the past, HP-based armour. Skilled players make good use of cover, so rarely get shot. Ablative armour is also basically a free hit, which allows you to perform suicidal tactics. If you know you can take three hits before dying, then you might as well act like a maniac until you get hit at least once. You can then rotate other troops in with full armour, until everyone has had a turn playing Rambo. This might be interesting for an action game, but for a tactics game it's just a droll sort of meta game strategy which makes you feel totally secure while fighting 'horrifying' aliens. It also has the issue of turning everyone into MMORPG style bullet sponges, as the game progresses.
If you have an armour upgrade, of course it will give you more HP. Whereas before gunfire might've been dangerous and intimidating, it becomes laughable. The suicidal tactics I mentioned become the obvious strategy, as there's no reason to fear Reaction Fire as you rush through the open. To get things back on track, you add in guns with massively more damage, fixing the armour and undoing what it did. Soon, you all wear increasingly bigger pauldrons and use sillier looking axes, until you look like this. The weapons at the start of the game become toys, and you enter an epic league beyond human interest.
Balancing ablative armour isn't really hard, it is just pointless. It's great for padding out recent games by turning them into mind-numbingly boring RPGs, that sell XP boosters so you can get them over with faster.
Real armour has some of the qualities of the above. Like the Ablative, you can try to tank some hits, and play things more riskily. And it is risky, Since like % armour it is possible to be killed by enough pistol shots, so long as one of them goes through your visor. You can't ignore tactics, you still want to use cover and avoid fire, in case your armour fails you. Yet you still get that feeling of power, from wearing armour that lets you shrug off attacks that would surely kill your unarmoured allies. Still, you never shake the feeling of dread, of when an enemy sends a plasma bolt your way.
There's not a lot to say about genuine armour... because there isn't anything wrong with it. Straight-damage armour serves its purpose, and it does it well; even if it does it without the fanfare and flashy numbers of modern games.
Balancing this isn't as easy as Ablative armour, where you can just pick whatever numbers you feel like, but it is straight forward. Armour is built to withstand certain levels of gunfire, and weapons are designed to pierce that armour, each piece of equipment has its class and its uses in the tactical meta.
Below are some additional ideas and details for the handling of armour.