Some people want to understand armor.... I'm going to blast you all with a counterpoint and say that we should make it complicated with no regard for human reasoning, and yet easily understood/felt.
For players, have different styles of armor using different mechanics/formulas balanced by resource cost and research levels. Armor should act differently, and different styles should take different resources forcing people playing on the correct difficulty to run a hodgepodge mix. Players can influence (or decide if they're lucky) the armor mix by tactical and strategic choices such as:
Breaching alternate UFO entrances to get better positions but less alien alloys
Risking rookies to capture live aliens to get alien McGuffins
Focusing on vehicles and using it as bait/armor
Focusing on other strategic concerns like the airgame/base expansion and just having naked dudes run around
This gives players choice and should provide interesting gameplay/strategic dilemmas.
For alien armor, different species should have different mechanics. The first few alien armors to be encountered should be ablative HP based, and after that, you can go wild with armor mechanics. However, we should be able to research a way to find out what species we'll encounter on a mission so we can prepare for the Androns or whatever that makes pistols and shotguns useless, or some super fast flying bugs/saucers that have a no HP but an accuracy penalty for the first few shots fired at them making sniper rifles useless, and etc.
Here, let me toss some examples out for a player armor progression:
Research level 0:
1) Overhardened ceramic combat armor
Tanks 1 ballistic/chemical shot (no matter how damaging or insignificant) to the chest (75% chance to activate) only and immediately becomes a burden only meant to slow your dudes down afterwards.
Shots that hit unarmored legs, arms, head, etc. means you're basically unarmored (when you fail the 75%)
2) Unarmored Xenonauts 1 style
Spiffing blue helmet and comfortable uniform, giving reflex and TU bonuses
1% weird accidental chance of enemy fire ricocheting off said spiffing blue helmet and no other protection
Style points
Research Level 0a:
1) Stun protection
Early research project, upgrades both previous armors.
Padding and rebreather/SCBA system stops stun damage.
Maybe no visual difference.
Research Level 1:
1) Alien alloy combat armor like Jackal in X1
Nearly better than ceramic in every way
Basically adds HP
Weighs a lot, TU and reflex debuff
Has to be built with alien alloys
2) Upgraded combat shield
Replaces stock combat shield, meant to be used with unarmored
takes away 1 hand to use
HP and direction based
Research Level 1a:
1) Reverse engineered alien force-field
Adds HP without the penalties
Takes only 50% damage from incendiary/energy
Has to be built with alien alloys + some other expensive McGuffin
DOES NOT WORK IN COVER because it interferes with sensors or something I dunno I can write a paragraph that convinces you if you want to.
Bulky so cannot wear armor with it
2) Unarmored Jetpacks
Fly, that's it
Requires alien energy McGuffin
3) Perfected Ceramics
Like ceramic, but tanks a single shot from any direction and now without penalties
Meant to be the standard free armor from now on
Research Level 2:
1) Perfected Alien Alloy combat armor like the Wolf:
Better than alien alloy, needs more alloys, same debuffs
ignores x damage no matter what
2) Shielded Alien Alloy combat armor:
Like alien alloy, but needs expensive McGuffin
combination of alien alloy and reverse engineered alien force-field
3) Shielded Jetpack:
Made from jetpack and expensive McGuffin
Can fly and has force field
...and so on
I can write out the alien counterpart if people think this has potential.