Resistances work very similar to how armor does.  They absorb damage, except resistances each only absorb their specific type of damage.

Here's how resistance actually works in the game:

EffectiveResistance = Defenders Resistance of that Damage Type

AbsorbedDamage = RandomValue between EffectiveResistance / 8 and EffectiveResistance / 4


Other info:

Resistances are only 5% as effective on DOT (damage over time) effects.

Resistances are only effective at their specific damage type.  Ex. fire resistance only helps with fire damage. 

If AbsorbedDamage is greater than the original damage then the victim takes no damage.

The number that is reported to you in the game when you highlight a resistance value is an estimated percent based on how much damage an average monster of your level does and what your specific resistance value is.  This only really applies to monsters that do that particular type of damage also.

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