The Energon Pub

does armor add extra defence to your robot?

Against weapon attacks, it takes away a percentage of the damage (about 9-10% for each rank the armor needs if you have 10 tons of them - so a few tons of the weaker armors doesn't make much difference, but 10 tons of the toughest armor takes 95% of incoming damage away)
Also, armor doesn't influence the damage gained from tactics - so a rammer or strafer can punch through armors.

Further, Endurance influences both the damage from tactics and weapons - not much on low stats though.

http://www.seibertron.com/heavymetalwar/help/armor.php

That is the armor chart listed in the help section. I am not sure how accurate it is anymore, but it should give you the basic understanding of installation, cost, time, and requirements. Strength is also required to install armor.

Chaoslock did a pretty good job summarizing what armor does as well as the added bonus of what endurance does. Once you get enough experience, it is usually a good idea to invest in both armor (rank/strength) and endurance to cut down damage from both weapons and tatics.