Armor

Armor adds extra protection via a separate health bar that reaches 10 armor points.

Player armor
Since Indev, helmets, chestplates, leggings, and boots can be crafted by players out of leather, gold, iron, or diamond (in order of increasing durability). This armor prevents part of the damage dealt to the player, including falling and fire based damage.

All incoming damage is reduced to a certain percentage based upon the effective armor points of the player (effective armor points are described in detail in Item Durability). Each point of armor reduces the damage you take by 8%, up to the maximum reduction of 80%.

Every time the player takes damage the armor loses durability, and its protective capabilities quickly diminish as it loses durability. See Item Durability for more explanation of how armor's durability affects its protective abilities. Materials such as diamond makes a strong armor that withstands quite a bit of punishment, while leather armor barely survives 20 hits. While durability is different, they all have the same effectiveness. For example if you wear a leather helmet it will give you the same amount of protection as a diamond helmet.

Chainmail armor can also be hacked into the game, or crafted with edited-in fire blocks. It has the same durability as gold armor.

Players can also wear a Pumpkin as their helmet. Although this will block the player's view and not provide protection from attacks, it will prevent Endermen from attacking the player when the player stops looking at them. However, the player will still be attacked if they physically attack the Endermen.

Crafting
It takes 24 units of material to make a full set of armor. Although it is not necessary that all of your armor is the same material, each individual piece must consist of only one material.

Note that it is most efficient to craft boots before a helmet because, while they both provide 1.5 armor points, boots require less material, and also seem to be more durable than helmets.

Chain mail armor has the same durability as gold armor and is no different than any other armor sets, except for the fact that it is only obtainable through inventory hacking (or certain mods such as Mo' creatures). There is a popular rumor that states chain mail armor absorbs all damage done, but of course this has been tested and proved to be false, (so instead of losing .5 armor and .5 hearts you lose 1.0 armor) but this is purely that - a rumor, and nothing more. If chainmail is ever added into the game as a legitimately craftable item, it will presumably be given a more practical durability and/or crafting method.

History
Before Alpha 1.0.8, wool was used instead of leather as the lowest tier of armor in Alpha.

Mob armor
In Survival Test, certain Zombies and Skeletons could be found wearing armor; a chestplate or a helmet. Zombies had the potential, although extremely unlikely, to wear both a chestplate and a helmet at the same time. Skeletons could also be found wearing armor, albeit extremely infrequently. Mob armor was purely cosmetic, however, although it is possible that it was a planned feature to increase mob difficulty.

Trivia

 * The head, chest and leg slot armor pieces have different names for armor pieces made of leather than that of armor pieces created by ore. The pieces are named caps, tunics, and pants. Boots are still called boots.
 * If you look in the armor folder inside Minecraft.jar, leather armor is still called cloth armor.
 * There is a texture file for armor labeled "Power". Its look is an indiscernible blue energy of some sort. It is the same blue energy that appears on a creeper when it is struck by lightning. It can be assumed that it was put in the armor files due to the creeper's likeness to a human.
 * The chainmail chestplate has slightly longer sleeves than all the other chestplates.
 * The Leather Armor design comes from a old game Notch never finished "Legend of the Chambered"
 * If you put on almost fully decreased boots when you have other armor on, it lowers your armor protection.
 * If you are sitting in a minecart with armour leggings on, and press, or pressing to be in third person, you legs will be in a sitting position, but your armour will be in a standing position.