Armour x % Physical reduction

Is Armour a damage reduction layer and % physical damage reduction another layer? Or both work together as one damage reduction layer?

Both Armour and Physical Damage Reduction work together when it comes to Physical damage taken from hits. Armour alone works wonder when it comes to lower little physical damage, but can become almost useless against big hits (Like Shaper Hammer), also it cannot ever mitigate a damage higher than 1/10th of its value. The math formula can be found here and is:

Armour rating / (Armour Rating + (Raw physical damage of incoming hit * 10))

A way more effective explanation of the given formula is given by a GGG employee who stated, more or less:

"If you wear a full armour, it will help you if I throw a bunch of toothpicks at you, but will not help you much if you are hit by a train"

On the other hand, +x% Physical Damage Reduction (like the one given by Endurance Charge) is a way more effective layer of defence as:

1) its effect is fixed: if you have a 90% Physical Damage Reduction (The highest Physical Damage Reduction value you can build up), you will lower any physical damage taken from hits and DoT by 90%, regardless of the magnitude of the damage (which is taken in account for Armour mitigation)

2) It also lowers physical Damage over Time (DoT). No matter how much armour you build up, you are still completely vulnerable to Bleeding, Corrupting Blood stacks and many Ground Effects that deal Physical Damage over time (Corrupted ground from Atziri trio, Heart of the Grove's Sacred Suffering, Void pits from certain Invasion Bosses, Spikes from Necropolis boss...). Combined by the fact you cannot convert damage taken from DoTs to other elements (for example, via Crystal Vault or Taste of Hate), PhysDamageReduction is the only actual layer of defence, beside Reduced Damage Taken (NOT from Fortify, which only applies on hit) against Physical DoT

Thank you! Then if a stack somehow a fixed 90% physical damage reduction would armour be useless? And by the way, is there some difference between elemental resistance and reduced elemental damage?

Yes, if you actually manage to get 90% PhysDamageReduction, having armour will be pointless unless you have items that scales their effect with it, like Aurora Aegis or Molten Shell. So far, there are no mobs that will Overwhelm your Physical Resistance, except for one single boss that cast Punishment and reside in a Vaal Side Area, so it's negligeable.

Elemental Resistances and Reduced Damage Taken/ Reduced Elemental Damage taken will actually work together in tandem. Reduced/Increased/less/more damage taken, in any form, will lower (or raise) the damage you are taking after your resistances kicks in.
For example, if you have 75% Fire Resistance, are under Fortify (20% Less damage taken), and you take a 1000 Fire damage Fireball, the formula will be:

1000 * (1-0.75) * (1-0.2) = 1000 * 0.25 * 0.8 = 250 * 0.8 = 200

where 0.25 is the fire damage you should take after FireRes kicks in
and 0.8 is the actual damage you should take after Fortify does its job

This also mean that, if you have 90% PhysDamageReduction and want to lower your physical damage even more, you will have to resort on Fortify or similiar effects

This was so much helpful. Now I know what path to follow :)
Thank you so much!