When a mob lands a hit on you, this hit is divided into 2 components, DB (Damage Base), and DI (Damage Interval). More specifically, the formula is DB + (1-20) DI. The mob rolls a number between 1 and 20 that multiply the DI. DB is the damage that you will always take. Your mod2 melee shielding % reduces this DB. Your AC will impact the (1-20) DI. The higher your AC is, the less likely the mob will roll high numbers in the (1-20).