So my thinking is that armor provides damage resistance for the whole body, such as humans gaining 0.2 skin armor per level in unarmed combat. I don't think armor skills would boost this, though there could be other ways to boost it? I hope the armor bonus per level increases with rank as an armor of 20 seems like a low reward for a master of unarmed combat. Otherwise, I suppose being able to subtract 20 damage from every strike an enemy lands on you is useful against massed foes such as goblins and eaters. I think defense is limited to the area it physically covers for the defense stats, though traits that boost resistance would likely cover the whole body hence they are only a couple percent.
I assume the skin armor helps all over the body but the regular armor only helps where it covers you.
Most likely, although there might be some slight leakage of Physical Armour Protection to non covered body parts, especially with Magical Armour(?) but probably not usually.
That's basically what i'm thinking as well. So for example, if you strike my 15 defense breast plate with your 15 damage dagger it would be largely negated and the 8 surplus damage from skill would be absorbed by my 10 skin armor. If you strike bare skin, only the skin armor would be subtracted from the damage, which probably isn't enough to stop anything but the weakest strikes. Might be really useful if you are swarmed by hundreds of level 1-2 eaters that only do 4 to 6 damage per strike as it would render you immune to their natural weapons, but not against much else.