How exactly does this work? I understand it gives dam redux related to armor but putting aside dex (which I understand doesn't affect it) and spells (which I understand do), how does the armor you wear affect it?

Does the ac value of the armor, e.g. ac vs bash, ac vs slash, ac vs magic, etc matter?

Or is it just the -20 ac effect that comes with Dern armor, say?

Or is it the weight of the armor, like 40 lbs?

From what people say I get the impression it is the -20, but does the ac value vs slash (say) not also matter?

Basically you want armor that gives you AC -- both AC affects on the armor (e.g. '-20 to AC') or AC on the armor itself (AC vs. slash) are helpful.

For what it's worth, when I've chosen this legacy, my gearing strategy is almost exactly "wear actual armor (not clothing/treasure/etc.) in every slot I can, but otherwise pick gear for stats like normal." I believe this is one very good way to balance picking gear to milk the legacy with picking gear that gives you AC at too high an opportunity cost.

Very good explanation.