Penetration and Reduction, whether Armor or Magic, are important stats for any champion looking to do significant damage as a game continues forward. They can also be fairly befuddling.
The first source of confusion is the separation of the stats themselves. This is the unfortunate, but necessary, result of game mechanics. Reduction is a debuff, granting its benefit to anyone attacking the affected target or targets. Penetration is a personal stat that benefits only the holder. Because Penetration does not benefit the team it can be balanced to give a greater personal benefit, whereas Reduction is usually found only on expensive items and support champions. Without this separation either some support champions would lose a critical benefit or carries would see diminished effectiveness from several key items.
As a further complication both stats can appear in two forms, flat values and percentages. In effect, Penetration and Reduction are actually four stats in all. Because of these two forms the order in which the stats are applied becomes highly relevant, and has actually changed over League of Legend's history.
In the earliest days of the game these stats were applied in the following order:
% Reduction
Flat Reduction
% Penetration
Flat Penetration
This, however, lead to a number of problems. Because % Penetration was applied before Flat Penetration the combination of the two was extremely potent. Building Armor or Magic Resist felt largely useless because the vast majority of it would be meaningless. Between Last Whisper and Armor Penetration runes and masteries a tank's 200 Armor would shrink to 85, and a non-tank's Armor would often be completely irrelevant. Because of these issues Riot altered the order.
The new order became:
% Reduction
Flat Reduction
Flat Penetration
% Penetration
In addition, both Last Whisper and Armor Penetration runes received nerfs. The net result was that our hypothetical 200 Armor tank would still have 104 Armor after penetration, and a non-tank would actually have a significant chunk of armor remaining.
At that point % Reduction was only found on Nidalee's Bushwhack, so its place in the order of operations wasn't particularly problematic. However, by the time of the second Kayle rework a large number of champions were now sporting % Reduction effects. Wukong, Jarvan, Renekton, Trundle and now Kayle all had them. This was a potential disaster, as not only was Flat Penetration applied after % Reduction, but so too was Flat Reduction. Riot wisely headed off the problem by changing the order again, and that change is still in place today.
The order as it is now:
Flat Reduction
% Reduction
Flat Penetration
% Penetration
Since the release of Wukong very few other champions have been given % Reduction, and with good reason. The combination of % Reduction and Flat Penetration remains very strong, though not abusively so.
So after all that history, what are the practical applications?
First, and most obvious, if you're one of the 10 champions with % Reduction then Flat Penetration can be very valuable. How valuable depends on the strength of your % Reduction ability and its ease of use. Wukong and Jarvan love Flat Penetration because of their simple yet strong % Reduction Abilities. Jayce and Shyvana, on the other hand, don't really care as their abilities aren't as effective or easy to use.
Less obvious is when to stack Flat Penetration on champions without % Reduction. Few AD carries stack Flat Penetration because it is hard to come by and delays their vital items. Bruisers sometimes grab Brutalizer if they're ahead in an attempt to press their advantage. AP carries, however, will often attempt to exploit a strong mid-game through a combination of Sorcerer's Shoes, Haunting Guise, and Abyssal Scepter, even if they aren't already fed. It's a tough call that depends a lot on a champion's role, skill set, and the game's circumstances. The most important rule to keep in mind is that Flat Penetration, while less effective late-game, is nonetheless effective; unless your item slots are all full it's better to build other items rather than foolishly sell your Flat Penetration items.
You can also build team compositions around stacking Reduction effects. This was once popular, but became rare after dragon and Baron became immune to these effects. It used to be that a team with Nidalee and Trundle could tear through Baron in the blink of an eye. This team composition was nerfed in order to make Baron less than the be all and end all of the late-game. It's still effective against tanks and their teams, but not so effective that anyone has found a compelling reason to revive such team compositions.
Hopefully Penetration and Reduction have become less mystifying, or at least more interesting, as a result of this post. It was far more history-heavy than math-heavy, but hopefully my chronicle of the long forgotten past was not as dull as some history lessons can be.
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