This is a really good question, and I expect it to come up a lot in the next couple of months. I"ll see if I can explain this in a way that makes sense. I'll start with the short version, then get into a longer version in case people are interested.
The short version: if a hunter needs a certain number of bullets to kill you, damage reduction makes each bullet hurt less, so the hunter needs more bullets. If you get even more damage reduction, it reduces the damage not only of the new bullets, but also on all the previous bullets the hunter had to use to kill you. Every time you get more damage reduction, the number of extra bullets a hunter needs increases exponentially. It's not a linear increase.
In other words, damage reduction is kinda meh up to a certain point. Once you reach that point, every extra bit of damage reduction makes a bigger and bigger difference, until it takes a ridiculous number of bullets to kill you.
Now, here's the longer version.
Let's say we have 100 health and 50% damage reduction. That means every time someone tries to do 100 damage to us, half of it gets dropped (in this case, the damage reduces by 50). Someone has to actually do 200 damage to kill us. In other words, our 50% damage reduction combines with our 100 health to actually give us 200 "effective health". So far, so good.
Now let's say that instead of 50% damage reduction, we have 75% damage reduction. That means every time someone tries to do 100 damage to us, three quarters of it gets cut out i.e. the damage reduces down to 25. So to kill us, someone has to actually do 400 damage to us (the damage reduces to 25, then multipled by 4). In other words, our 75% damage reduction combines with our 100 health to actually give us 400 "effective health". Right here is where we say, hey, waitaminit!
How come we only need 25% *more* damage reduction on top of our original 50%, to get the same effect as that first 50% damage reduction? Just wait, it gets crazier. Let's put more entries in the list:
100 health with 50% damage reduction gives us 200 effective health.
100 health with 66% damage reduction gives us 300 effective health.
100 health with 75% damage reduction gives us 400 effective health.
100 health with 80% damage reduction gives us 500 effective health.
100 health with 83% damage reduction gives us 600 effective health.
100 health with 86% damage reduction gives us 700 effective health.
100 health with 88% damage reduction gives us 800 effective health.
100 health with 89% damage reduction gives us 900 effective health.
100 health with 90% damage reduction gives us 1000 effective health.
Notice how we can increase damage reduction less and less, to get our jumps in effective health? Going from 300 effective health to 400 effective health took an additionl 9% of damage reduction, but going from 700 to 800 only took us 2%!
That's why stacking damage reduction is so powerful. To be sure, we have to easily reach a certain point to make it worthwhile. If we use all of our gear to reach 40% damage reduction, that's going to suck. But if we use all of our gear to reach, say, 65%, or higher, than were talking a big, big difference!
High levels of damage reduction increase the potency of anything that increases or restores your health. If a priest bubbles you with a 200 hp shield, and you have 66% damage reduction, that means the 200 hp shield actually gives you 600 hp! Same thing for heals.
While this likely won't make an impact for 10s in instanced PvP (because it will be much harder to reach the higher levels of damage reduction that make it worthwhile), it could be huge for World PvP and PvE!
For anyone who's interested in the math behind damage reduction, effective health, and choosing between damage reduction and stamina (and wants to see how far back these concepts go in World of Warcraft, when resilience was a thing), check out this article from yesteryear:
https://web.archive.org/web/2013101...g.net/effective-health-resilience-vs-stamina/