More armor equals less damage taken, which in turn saves some extra mana from your healers.
Since 3.0.2 this talent also reduces duration of movement slowing effects taken by 6-30%
Unlike some other defensive talents such as Deflection or Anticipation, this talent scales with your gear. For a well equipped end-game paladin tank, this talent's damage reduction would be equivalent to 4-5% extra dodge/parry, however it is more consistent since it applies to all physical damage taken. Higher physical damage reduction makes you require less healing by a small amount, but during 5-minute or longer boss fights in the instances, it quickly adds up and is making quite some difference.
This talent is considered essential for Protection Paladin tanks.