It works like this: 1 armor is 1 armor, but 1.5 armor is 1 armor + a 50% chance to block 1 additional point of damage.
The first time I saw something like this was the “Will to Survive” perk in XCOM: Enemy Within - Long War mod. That perk gave you “1.5 damage reduction” if your soldier was in cover and attacked through that cover. Thus, your soldier would always have damage reduced by at least 1, but a coin flip could bump that up to 2.
In Phoenix Point, this could work for armor. If an enemy has 2.5 armor on a part, and you have 3 damage per shot, you would essentially have a 50% chance each shot to do 1 damage. So do you take the gamble, or wait?
This might just be an overcomplication of the current system, of course. But I wanted to present the idea, just in case you guys thought it was worth going over.