So for example, I see that heavy cruisers have like 75 armor, but my cobalts with their 11 DPS and 25 armor penetration seem to do plenty of damage to them on bulk, so I'm not sure how armor effects DPS, and how armor penetration factors in to that.
Armor penetration seems to reduce the enemy ship's armor by that amount for that attack.Each armor point seems to increase the effective hull of the ship by x%. So a ship with 100 armor takes twice as much damage to their hull points to destroy, compared to a 0 armor ship. If its attacked by a weapon with 100 armor penetration though, its like the armor bonus isn't there.
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