If your Pen is less than the enemy's AR by even one point you will do 30% damage.
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Back when Obsidian first showed off Deadfire, it included a new mechanic: Penetration. Instead of Damage vs Armour, attacks would compare Penetration vs Armour, and if your Penetration was less than their Armour- by even one point!- then you'd only do 30% damage. The idea was that players would have to pay attention to their items' stats and it would be crystal clear which weapon was best to use against any given enemy.
They nerfed this in the beta, so if your Pen is 1 less than Armour you do 75% damage, 2 less you do 50%, 3 or more less you do 25%. This has the effect of making Penetration more or less ignorable as a mechanic. I thought Penetration sounded insane when I first heard of it, but for my next playthrough I want to try engaging with it as originally envisioned and see how it affects things. I'm uploading this in case anyone else feels like doing the same thing.
May make the DLCs much tougher! My assumption is that a lot of the base game encounters were balanced around the original Pen mechanic, and Pen being changed may be partly why the game was so easy at launch. The DLCs were made with the current Pen rules already in place. So be prepared for a crunchy experience.
To install, just extract the archive into the Pillars of Eternity II\PillarsOfEternityII_Data folder. To uninstall, just go into Pillars of Eternity II\PillarsOfEternityII_Data\override and delete the HF Pen Mod folder (or just do it from the in-game mod manager). It should be able to be dropped into a game in progress or dropped out again without any issues