Is there some aspect of this or the math behind it that I do not understand? If it reduces the damage that you take, that is good, right? Or does it only reduce damage to me if I would otherwise get a mortal attack against me?
Just dodge the attacks. They are more punishing but avoidable. Once you have enough skill, you won't need to resist them, because you'll just not get hit
No, not everything. For example: Ring of Elements, arguably Ring of Tenacity, Ring of Wealth while ascending, Sandals of Nature, Alchemist's toolkit, for some reason the Amulet of Yendor, blocking enchantment (it's a joke, it's trigger chance is really rare and it gives low shield for a small amount of turns. If you upgrade the weapons to make it more effective you won't need the shield, enemies just die) and all the shards (free achievement or gold)