This mod replaces Skyrim's armor formula. This changes how effective different armor ratings will protect from damage.

Generally speaking differences between low armor ratings are more important and differences between high armor ratings less important than before.

The formula
  DamageReduction = ArmorRating * constant + HiddenReduction
is replaced with:
  DamageReduction = ArmorRating * constant / (1 + ArmorRating * constant) + RemainingDamagePercentage * HiddenReduction

That means, looking at how many hits an (N)PC can take:
- With the original formula the value increases faster the higher the armor rating is.
- With the mod the value increases linearly.
You can find a full overview of the original armor rating system in the UESP Article.

Terms used:
DamageResist: Actor Value that equals the sum of the armor ratings from armor and armor spells.
Damage Reduction: The part of damage that is averted.
Hidden Damage Reduction: Skyrim applies this based on the number of armor items worn (3% per piece, up to 15%).
Armor Cap: The maximum Damage Reduction in percent. Game setting fMaxArmorRating (80 by default).
Effective Health: The health needed to get the same protection that is provided by the armor. This value is proportional to the number of hits an actor can take.

Images: All images show the mod curves with Armor Cap disabled (set to 100). For the images and the interactive diagram all game settings are at default values. Where Hidden Damage Reduction is included the diagrams show the values for fully equipped actors. The x-axis shows DamageResist values.

With this mod weak armor is generally slightly stronger than without. When the Armor Cap is set to 100 the Damge Reduction approaches 100% but only reaches it for very high DamageResist values and only because of rounding. Hidden Damage Reduction is no longer directly added to the regular Damage Reduction but instead multiplied with the remaining damage beforehand, decreasing its impact for higher DamageResist values.

Formulas:
HiddenResist = CountWornArmorCategories(Head Body Arms Legs Shield) * fArmorBaseFactor (game setting; default 0.03)
VanillaResist = ArmorRating/100 * fArmorScalingFactor (game setting; default 0.12)
r1 = VanillaResist * 5.0 * ScalingFactor (json setting; default 1.0)
r2 = r1 / (1 + r1)
r3 = r2 + (1 - r2) * HiddenResist
Damage Reduction = min(r3, fMaxArmorRating (game setting; default 80) or OverrideArmorCap (json setting)).