FOSS gamedev and creative worlds

Could someone explain to me in layman terms how the new damage system works. Here is the changes from new to old. http://dev.minetest.net/Damage_system

I see how it works :)

My impression is that whatever you set the tool's value in it's damage groups to for the objects' corresponding armor group, that is the number of HPs of damage it will do to an entity with the armor group's value set to 100 (meaning 100%). If the entity is set to be damaged less for that armor group (e.g. 50%) or if the tool has been swung less time ago than it's full punch interval, the amount of damage will be reduced.