Armor benefits you by reducing the amount of damage you take. Whenever you are struck by an attack, your armor will mitigate part of the damage. In general most armor is better against physical damage, although there are pieces with strong elemental defence.
When you take damage, the amount you take is calculated against your damage absorption, first against your overall physical damage absorption, and then against the specific attack type absorption (i.e. strike, slash, thrust).
With the Silver Knight Armor, the damage is initially reduced by 134 damage due to the attack being Physical, and then reduced by 141 due to the attack be a Slash attack. Resulting in 725 damage being taken.
With the Master's Attire, the damage is initially reduced by 27 damage due to the attack being Physical, and then reduced by 27 due to the attack be a Slash attack. Resulting in 924 damage being taken.
As you can see, the defence of heavier armor can substanially reduce the amount of damage you take, especially against physical attacks.