How a hit is worked out

The steps

1. Your Physical or Magic Power comes from your attributes, gear and skill nodes. Strike Damage, Thrust Damage, Blunt Damage use Physical Power, every other type uses Magic Power.
2. All percent bonuses for the hit add together into one number: the damage type's own bonus, its family bonus, and the bonuses against the target's condition. Power is multiplied by that sum once, then rounded to 2 decimals.
3. Buffs and debuffs on damage apply next. The result is cut to a whole number.
4. The target's armor or resistance removes its share, never leaving less than 1.
5. The spell's damage coefficient multiplies the result.
6. A creature's hit grows with the number of players near it, when that creature has group scaling.
7. A creature's hit is then multiplied by its empowered bonus and the difficulty's damage setting.
8. The game rounds up to a whole number.
9. The critical roll happens last. On a critical hit the rounded number is multiplied again and rounded up again.

Damage over time skips this path. It has its own rule, with no critical hits.

When a creature takes the hit, the difficulty's damage-taken setting applies, then any shield absorbs damage before Health does.