Armor vs Damage Reduction in Diablo 4: what's the difference and which matters more?

Armor
Armor reduces physical damage only. Each point of armor reduces physical damage by a percentage.
Damage Reduction
Damage Reduction reduces all damage (physical + elemental). Sources: Fortify, Barrier, skill effects.
Calculation
Total DR = 1 - (1 - Armor DR) × (1 - Elemental DR) × (1 - Fortify)
Best Defensive Builds
- Druid Pulverize — high Fortify uptime
- Sorcerer Ice Shards — high Barrier uptime
- Spiritborn Thorns — reflect damage
Armor Stacking Priority
At endgame, armor caps out at ~10,000. After that, focus on Fortify and Barrier.