Absorbs a great deal of enemy weapons fire, protecting a ship's juicy innards. Also acts like a "lightning rod" for E.M.P effects.
Armor is the best way to protect the critical parts of the ship from any damage source.
Note that armor penetration resistance is stated per tile of the armor, not the whole piece (so a 1x2 solid plate actually has 12 when shot through both blocks). Whereas E.M.P resist is applied along the piece as a whole.
Also, resistance doesn't include the size of the tile itself, so a 6 resistance tile (1x1 solid for example) would actually stop a projectile with up to 7 penetration.
Damaged tiles preserve their full resistances until completly destroyed.
All armor parts except the basic 1x1 square also have a variant composed of half-Armor, half-Structure. This has the benefit of providing full mounting points on all four sides of the piece of armor, by virtue of the structure "filling in" the overall shape, at the expense of additional resource cost over the corresponding base armor component and without providing any additional hit points, penetration resist, etc. See the Structure page for details.
Strategies
Armor Weaving
One of the most effective strategies with armor is armor weaving. Depending on the weapon type, distance and angle, armor weaving can distribute the damage much better between blocks of armor compared to equal grids of 2x1 or 1x1 (TODO: make gifs of armorweaving vs non-weaved 2x1 vs 1x1 grid)
Using The Right Pieces
No two armor pieces are made equal (aside from ones of the same type), using a set budget for armor may result in two very different outcomes when put to the test despite the HP of all pieces scaling linearly with size, weight and price.
The 1x3 armor wedge has far worse penetration resistance than any other armor type. It's not recommended to use for anything other than its decorative value, as doing otherwise (replacing solid armor to reduce weight for example) will significantly compromise the ship's protection.
In stark contrast to their 1x3 cousin, the other wedges are ahead of the pack in this regard -- for example, replacing a single 2x1 solid armor piece with two 1x2 wedges would theoretically increase the penetration resistance by ~42% for the same weight and price (10 resist vs 7). However, it's often not possible to directly replace a solid armor piece with 1x2 wedges due to the reduced number of attachment points. This issue can be addressed by using armor variants with full structure, but doing so would require spending money on non-armor parts and could shift the center of mass away from the ship, potentially affecting its mobility. Despite the additional cost, doubling the volume of armor (making it twice as resilient to area damage) and the greater penetration resistance (~14% after the addition of structure) should still put it solidly ahead in most situations. (Weapons with no penetration or any area damage, like energy weapons, being the only weakness.)
example armor design that uses 1X2 wedges:
TL;DR
1x2 wedge is the best piece, still good with structure, should beat solid 2x1 in most external armor uses.
Penetration Testing
Below is a penetration test performed with a single shot from a railgun having 67.7m of penetration.
Both orientations of the 1x3 wedge failed to stop the projectile.
Now for a more reasonable test featuring a railgun with 30.8m of penetration (8 accelerators) with a cost of 2400 per armor type, all sets also weigh the same.
All armor types cover a consistent frontal area of 2 tiles, the 1x3 wedge wide has 50% more budget allowance due to being larger than the 2 tiles required for this test.
While all armor variants managed to stop the projectile, notice that tall pieces take less total damage but are significantly weaker to repeated hits to the same column.
The 1x3 underperforms for both orientations.
Also note that in more realistic conditions, projectiles might hit both halves of a vertical armor plate, greatly increasing its effectiveness, this can be seen in the 1x2 wedge example that got penetrated one tile less than the calculation would suggest.