The whole armor system can go die in a fire though. It's absolute shite and it cascades into a whole slew of other mechanical problems with the game.
How does the armor system work?
In short: You have magical and physical armor, the former protecting you against elemental damage and the latter against physical. They are regained after fights and various abilities and items can restore them mid-fight. Until either is depleted you do not take any damage from attacks of that kind (so no fire damage until magical is gone) and more importantly, you will not suffer status effects from abilities or environmental hazards of that kind.
This prevents the hilariously shitty OS1 problem of initiating every fight with your best status effect and then chaining them indefinitely to prevent your opponent from ever getting a turn. The down sides are many:
A) The best party quickly becomes one where all members deal the same type of damage, so you are better off with 4 fighters or 4 wizards instead of an even split (on release the recommended party for highest difficulty playthroughs by the community was 4 warriors with shields).
B) Some encounters skew horribly against partys that rely too much on either kind of damage, making the difficulty curve uneven because you might suddenly run into enemies that have high armor against your preferred damage type.
C) Magic is shit compared to physical damage. This is largely due to the fact that there's only 1 type of physical damage and no enemy is completely resistant or even healed by physical damage. For mages, not only are there 5 major damage types (6 if you count Witchcraft's physical damage magic) but many enemies are completely immune or get healed by one or more of those. This means that a wizard party has to spread its' damage over several types and in many encounters one or more of your members will be pretty useless (classic example being using a earth/fire mage against fire enemies).
Thanks. Maybe by the time I get around to playing, there will be some tweaks with regard to the armor system. I've watched a few build videos that have popped up on my Youtube feed and it seems like you can still do good enough with any kind of build.
Well, it's a shame it didn't stick the landing, but the original D:OS endgame was a mess too.
I guess it was nice of Larian to let Chris Avellone write KotOR II the way he always wanted, but I have seen this story before, so I'm not that amazed, even if it's a huge improvement in writing.
D:OS 2 is still a wonderful game, I'm sure the gameplay issues will be ironed out, but it soured my experience enough to curb my enthusiasm.