Here's the type of armor system I was thinking of:
It's still very simplistic, but even with massive amounts of armor, it never technically reduces the incoming damage to 0 (thought it may come close to that).
Each armor point stands for 5% Effective Health Points or EHP.
So if a unit has 1000 health and 100 armor, it effectively has 6,000 EHP against attacks without any armor penetration.
Say a ship fires a shot doing 100 damage (and no armor piercing) against the same unit with 1,000 health and 100 armor.
1000 x 500% = 6,000. 6,000 - 100 = 5,900. When you return that to the original value, the ship has 983.333333 health left, and you just round that to the nearest whole number. So a 100 damage attack against a ship with 1,000 health and 100 armor deals 17 damage.
However, let's say the same attack does 100 damage and 50 armor piercing as well. The armor piercing is applied before the damage, so 100 armor - 50 armor piercing is equal to 50 armor left before the damage is applied. Therefore we do the same thing: 1000 x 250% = 3,500 health. 3,500 - 100 = 3,400. Reduce that back to the regular values and your ship is left with 971.4 health, so round it to 971 health. The ship with 50 armor piercing dealt 29 damage.
However, let's say the attack does 100 damage and has 75 armor piercing. 1000 x 125% = 2,250 Effective Health. 2,250 - 100 = 2,150. Reduce that back to the normal values and you get 955.5, which rounds to 956 health remaining. The attack with 100 damage and 75 armor piercing did 44 damage.
What if the attack does 100 damage and has 90 armor piercing? 1000 x 50% = 1,500 Effective Health. 1,500 - 100 = 1,400. Reduce that back to the normal value to get 933.3, or rounded to 933 health. So the attack with 100 damage and 90 armor piercing did 67 damage.
The reason I like this system is that it makes higher levels of armor very effective vs. non-armor piercing shots, but almost never useless. However, as an attacker's armor piercing approaches the armor value, they become significantly more effective against their targets than those who do not have armor piercing.
This is how a ship can technically have Low DPS and High Armor Piercing and still be an extremely effective unit against opponents with a lot of armor. On the contrary, a unit can have HIGH DPS and No Armor Piercing, and while it may be extremely strong against units with no Armor, it is equally ineffective against units with a lot of it, even though it still does a minute amount of damage.
With this relatively simple system, we could completely rebalance the game in a way that all the ships get their own unique role, using only simple statistics such as health, damage, armor, and armor piercing. The most important and defining characteristic of a unit would come from its external attributes such as cloaking, speed, ability to repair, munitions boosting, parasite effect, or whatever other neat things - instead of basically having value solely on what hull type multipliers it possesses.